– September 2, 2019
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Traditional news may not be “fake” per se, but people are right to remain suspicious of it. Deep insights into reality often get dumbed down into silly slogans and ideas, but that does not mean that they are completely off the mark. Remember Obamacare’s “death panels”? That bit of legend was rooted in the intuition that one should not receive healthcare or health insurance from the same entity that supplies one’s life annuity. The incentives, obviously, are totally whack!

What people sense with the news is that it is not, in fact, trustworthy because the incentives of traditional news providers and their readers are not closely aligned, especially when it comes to economic and financial analysis. That has long been the case in television, hence the constant admonitions to trust newscasters, but today it is also the situation even for newspapers and magazines, as most of their revenue comes from advertisements rather than subscriptions.

Back when people paid good money to have a physical paper delivered to their doorsteps each morning, if they read something obviously poorly done, like the 1619 Project in the New York Times, or the deeply flawed piece in the Wall Street Journal purporting to show that the recent economic expansion has not helped the poorest half of Americans by focusing on overly large gross aggregates, they would vote with their feet and switch to some other news source. Subscription cancellations chastened editors, encouraging them to tighten up their (editor)ship.

I purposely redacted the links to the two articles mentioned above because the game today in for-profit journalism is pageviews, which can be generated along a spectrum ranging from extensive, expensive traditional reporting to cheap, outrageous trash that generates social media buzz. All the survivors of the great newspaper wars of the last several decades, WaPo, NYT, WSJ, LA Times, and so forth, diversify their pageview portfolios by publishing articles along that spectrum. Some great economic journalists, like Jason Zweig and Simon Constable, are thereby able to continue to ply their craft, but readers rightfully remain wary of misleading reporting.

Other media outlets concentrate mostly on trash, on luring eyeballs to their sites with “clickbait” and lurid stories about penny stocks about to soar to the moon and sundry crypto-assets that cannot be far behind. You’re probably better off getting into the white candy van than following any hot tips on such sites, but to each his or her own.

Public sources of economic and financial news also exist. They tend to be as reliable as government-funded expeditions of the Arctic because they receive distorting government subsidies. Even the accuracy of some government economic statistics (raw numbers) has been questioned, leading to sites like John Williams’ Shadow Government Statistics (which, not coincidentally, is subscription-based).

Where else can people turn for news and analysis? Wilma Soss, a postwar corporate gadfly and NBC Radio financial news analyst from the late 1950s until 1980, offers one model. Her weekly 10-minute radio spot, which ran coast-to-coast, was sponsored only briefly. Ads ran before and after but they bore no direct relation to her show, for which she received a fixed salary tied loosely to average ratings, giving her incentives to provide lively, accurate remarks week after week. Indeed, she provided remarkably cogent analysis of macroeconomic and stock market movements and never once (I read all the extant transcripts) asked listeners to “trust” her. 

The proof was in the pudding, and her pudding was, with a few inevitable exceptions, mighty tasty for investors eager for non-subscription-based but accurate political and economic context.

Another quality source of general economic and financial analysis can be found for free, or at low cost, in various formats, provided by people, like Garrett M. Petersen and his The Economics Detective podcast, eager to establish or further burnish their reputations. Of course individuals donating their time and expertise, in full or in part, can only do so much. 

The most powerful independent sources of economic and financial analysis are therefore those backed by endowments, caches of cash-producing assets that allow them to pay smart people to think, research, and write without worrying about pleasing advertisers. Such sources, like Mercatus, the Independent Institute, and the AIER, still face economic realities like opportunity and sunk costs but they can provide a public good from a private source of funding dedicated, basically, to one thing — the Truth, insofar as our feeble human brains can ascertain and elucidate it. That is the closest alignment of incentives between author and audience that money can’t buy. 

Endowed providers of economic news and analysis certainly have views about the way the world works, “bias” in the words of those “biased” against them, but everything created by the human mind is embedded in some worldview or another. What people should look for are authentic results. The opposite of fake, after all, is real, as in the real world. 

Readers, viewers, and listeners should ask themselves if a particular article, segment, or podcast helped them to understand the world in a more nuanced, realistic way, if it helped them to an insight that made their lives better in some tangible way, like improved investment results or a more sophisticated view of a public policy. Such real world results can’t be faked.

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Robert E. Wright

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Robert E. Wright is the Nef Family Chair of Political Economy at Augustana University in Sioux Falls, South Dakota. He is the author of 18 books, including a new book on financial exclusion published by AIER.

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