Davos09: What’s missing in journalism?

The media machers at Davos got together yesterday with three economists to ask what went wrong in financial coverage that did not warn of the crisis.

Like other leaders from other segments of society here in the meeting of the machers, they did not don hairshirts. I believe that will be the worst outcome of this year’s Davos: a failure to take responsibility for the failure of leadership. But blame isn’t the most productive priority. What’s more critical is to ask what to do about the failure.

I wonder what gaps the crisis reveals in journalism. That’s where the discussion finally went yesterday. (Because it was held under the Chatham House rule, I can’t attribute quotes.)

The assembled journalists insisted that the crisis had been reported, that they can point to articles that warned of the insanity. I’m not sure whether that’s an effort at industrial whitewashing: If one reporter gets the story, the entire profession gets credit. But fine, let’s stipulate that the stories were written. But one of the wiser editors said that didn’t do any good because it didn’t make an impact; it didn’t register; it didn’t go mainstream.

So is that what’s missing in journalism: the ability to bang on a story until the world pays attention? Our assumption had been that if it appeared in a major newspaper or magazine, that was the definition of attention. It assumed that the world paid attention to our news. So under this argument, we could be seeing an admission that papers and magazines have lost their juice. But let’s get past that, too. I think there is something to the idea that we aren’t good at driving a story.

In response, I quoted Arianna Huffington telling the same group two years before that journalists have attention deficit disorder and bloggers have obsessive compulsive disorder. Josh Marshall’s key skill is dogging a story until the press and the powerful do pay attention. The press can learn from that.

But then again, as an editor said yesterday, if an editor devotes page one every day to a warning that the sky is falling, no one will listen to him, either.

A well-respected journalist told the group that in economics, there is no objective truth. It’s too complex. So it shouldn’t be declarations of doom that should dominate front pages. It should be questions: How can these companies be this profitable? What is the impact of this much leverage? How can people without income get loans? It the constant poking and prodding we need.

That requires the willingness to be a pain in the ass. We journalists used to pride ourselves on being pains in the asses — or just asses. But now they like to be liked — they think they need to be. They believe that maintaining their connections is their key value. But that compromises their ability to dog.

One of the journalists complained that companies are so opaque they are hard to cover. “There’s not much a journalist can do, or anyone can do, when you don’t know what’s going on.” That’s true. And indeed, I believe the most important reform we need to enact post-crisis is transparency, an ethic and law of openness. But this argument, too, lets the journalists off the hook. It’s our job to find out what people don’t want to tell us. Maybe that is the real definition of reporting. The rest is just information.

An economist that “it’s hard to hold the press to a higher standard than the profession itself.” There was much nodding. But I question that. If we are to be the watchdogs — instead of merely the messengers — then don’t we need to try to know if not more than our subjects than at least enough to know what to dog? I’ve long argued that journalists aren’t experts, they find experts. But maybe I’m wrong about that. Maybe news organizations need to hire different kinds of experts. One editor yesterday said he hired a cultural anthropologist who really was ahead in warning about the danger of derivatives because she looked at it through a different lens. An economist talked about hiring psychologists and even scientists and the emerging study of neuroeconomics. Papers have hired economists to cover finance. But papers can’t possibly afford to hire experts and people with different perspectives in every area they cover.

You’ve been waiting for me to bring blogs into this. Here’s my chance: Many of those experts and players are publishing themselves. They are questioning and arguing and so perhaps the key skill journalism needs is to curate that. (I also couldn’t get through a post such as this without saying “curate” at least once.

The risk now, many agreed, is that journalism will – as is its habit – overreact. A journalist I ran into in another session yesterday said she thinks we’re now in a “doom bubble.” American business journalism has been too American with too much reporting – including puffery – on companies and too little reporting on finance, on the markets that have such a profound impact on our lives. There are plenty of lessons to learn from journalism’s failure to warn well enough of the crisis to come. But we can’t stop at that, at incremental change in journalism: a few more of these people, a few more of those headlines, a better job with that kind of story. We need to look at the fundamentals of how news – a large, global, complex, interconnected ecosystem of news – can be and should be made now.

  • B. Nelson

    [edit oops]
    An economist that “it’s hard to hold the press to…


    …also, I thank you so very much for for insight and information from places I can’t be!


  • Switzerland is the worlds HQ for money laundering and illicit trade http://www.pbs.org/illicit/

  • One of the problems is that conventional wisdom is so pervasive. You can see a perfect example right now in the discussions of how best to “stimulate” the economy.

    The two camps basically differ as to whether direct government spending or tax cuts are the best approach. This may be important, but the legislation is going to include some of both (along with expanded social services), so that they are really only arguing about the degree each approach receives.

    What is not considered is that there have been economic crises elsewhere in the world dozens of times since WWII and that a large variety of approaches have been tried with varying success. These historical examples are ignored while the conversation in the US remains over whether the New Deal worked or not.

    If a reporter wanted to find out how well the S. Korean bailout or the Thai bailout worked who would he ask? Perhaps there are a few experts in this country, but most of them are elsewhere.

    Right now there is a counter-summit taking place in Latin America as an anti-Davos which is discussing “socialist” approaches to economic development. Is anyone covering it? Does a business or economics reporter in the US even know what sorts of questions to ask these people? Everyone in this country sees economics from a capitalist framework.

    Can one even study alternative economic systems in the US anymore?

    Excessive insularity and a belief in our own exceptionalism blinds us to much of what is going on in the rest of the world. The situation with nationalist movements is probably even worse as far as having expert reporters.

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  • You wrote: “I’ve long argued that journalists aren’t experts, they find experts.”
    It would be great if they actually did find “experts.” However, what appears to be the more common case is that what journalists seek is “interested parties.” For instance, when over the last few years when the Wall Street Journal or other papers wrote about housing prices, their “experts” would usually be people like representatives of real estate or home construction trade associations… Whatever their expertise might be, such shills would always say that “It’s a good time to buy a house!”. Interested parties, whatever their expertise, cannot be relied on for reliable, objective commentary… Unfortunately, the interested parties are often much more “interesting” than those with mere expertise.

    bob wyman

  • katie striker

    The press should be held to a higher standard than the company, else two sides are with-holding and manipulating truth.

    Open communication makes both success and failure easier to deal with and causes a partnership between all participants.

    Learn from each other, why should I invent the wheel if you did last week , we can then go on with our seperate projects.

    Bouncing ideas off one anouther , good and bad helps both grow faster as well as more solidly.

  • It seems to me that this relates to JJ’s recent post here about — and I will get the terms wrong, I’m sure — the “topic” or “article” or “story” as the unit of news.

    That is, the occasional item in scattered traditional media sources by various reporters will tend to lack the sort of context or explanatory journalism that a news outlet could build online.

    Combine that with the fact that most journalists are not only not experts, but frequently hostile to the subjects they are supposed to cover, and it is almost a sure thing that a story as complex as the collapse of the financial sector is going to slip between the cracks.

    PS to robertdfeinman: Given the number of stories currently discussing the question of whether the USG will be de jure nationalize major banks (as it is de facto moving towards now), I am sort of amused that anyone thinks socialist approaches to the financial mess are not being discussed, let alone the stories and blog postings discussing prior crises in Japan, Norway, etc.

    • Joseph

      Dear Karl,

      Just a note on the last part of your comments.

      What is being labled as “socializing” some U.S. banks has nothing to do with socialism. It is indeed an approach based on the best traditions of capitalism: Privatize what is left of the carnage done by capitalists and burden the public with the massive losses and let the “reporters” and “analysts” call it socialism. So people are screwed twice by the very smart derivatives-inventing capitalists: once when they lost their life savings, and another time when they have to pay for the privatization of what is left. You know, the “Good bank” vs the “Bad bank” game.

      • Um, no. There’s been talk about nationalizing banks.

        That’s socialistic. No way round that.

  • Elaine Decoulos

    The Society of Professional Journalists in America has a Code of Ethics, but I am not sure financial journalists even know about it. My encounter with them is that they are not journalists. Ethics for business leaders is a hot topic at Davos this year. It should also apply to the press.

    I once got a story in the Business pages of a British Sunday newspaper and was astonished when my story appeared, libellous and inaccurate, and that it appeared to have been traded to get a scoop from the company in question the following week. I was very upset, as it was a personal matter. But the journalist blamed me for the inaccuracy and I got no support from the Press Complaints Association in the UK, a self-regulatory body.

  • Jeff,

    The problem is that some of this early dissident voices didn’t get the front pages or covers of our newspapers or magazines.

    What we had was, remember, FORTUNE presenting ENRON as one of the most innovative companies of the world!

    That’s the problem.

  • Joseph

    I think there is not much journalists can do simply because the “mainstream” financial media, whether it is the Wall Street Journal or CNBC, function as the PR division of Wall Steet. An individual journalist may occasionally find and report something of substance, however, the “mainstream” PR machine easily buries that under tons of nonsense and neutral reporting.

    Finance is not a neutral game as we all know. There are losers and gainers. Unlike what is advertized, there is no such thing as a win-win scenario here. The whole system is set up to allow some to win big at the expense of the vast majority. This is excatly what is being played out.

    We should live our lives without dilussions if we do not want to end up disillusioned. Journalists are not a bunch of “independent” truth-seeking, corruption-fighting machines. They are part of the system. They must function as the power centers of the system require. If they dont, they are out. It is very simple. They are simply human beings. They just work there!

  • Greg

    The so-called “conspiracy nuts” warning of the New World Order and its foundation of power; the fiat money system, have been warning of this for decades. Maybe it’s time to listen, huuuuh?

  • Dave Moelling

    I always thought you should fire the writers and hire some ex private eyes for news. The words might not be as smooth, but they would instinctively dig up facts and also have a keen sense for things that are “out of place”. Remember Enron was reported well in advance of the collapse by the Houston Business Journal and WSJ based on the smell test.

    Even if it would be reported, people are always looking to get rich quick and most would dismiss the reporting

  • The “takeover” of the banks by the government is yet another case of people using terms which have no meaning, but are easy for the pols and press to adopt so as to sound knowledgeable.

    “Toxic assets” are not toxic – they are worthless (or worth less). Pricing them at current market value, that is offering them for sale in open auctions, would reveal that much of banks remaining assets are of little value. Anyone who discusses “toxic” assets has no idea what they are talking about. Ask them to define it and see.

    “Socializing” banks is another term. Banks are already owned in part by the government, what is being discussed is whether the management of the bank should be chosen by those currently in control or picked by the government. Fannie and Freddie are now run under government supervision, they seem to be doing OK, given what they have been ordered to do.

    Yesterday a financial writer on “Now” stated that putting the government in charge of running the banks would be a bad idea since the government has a poor record of running things. Apparently she has never heard of the TVA, the Defense Department and the entire military infrastructure, the VA or Medicare/Medicaid. The government is also running dozens of banks taken over by the FDIC. I’ve not heard any complaints about how they are being managed.

    I’m not sure which is worse uninformed journalists and pundits or such people who are both uninformed and bluffing.

    I still see no press reports on the South American economic summit being run as the anti-Davos. On the other hand the amount of blather from Davos continues unabated. In the many years of its existence name one solid accomplishment that has come out of the meetings. A glorified ski holiday pretends to be a substantive meeting and the press falls for it.

  • urba

    In Davos there was only few remarks on oil prices as a leading factor in world economy disturbing. Since 2001 crude oil conxumption was growing in Pasific Asia faster than world oil lifting. This started at 2002 petrol and food prices growing too. In USA and the other countries there appeared more money to buy petrol and food…at higher prices – savings were used. To stop inflation basic interest level from 1.25 was rised even to the 5.25 percent at 2006. Middle class bottom at this level of rates can’t pay housing money tied to rates…Mortgages system crashed in the USA like housing bussines crashed… September 2008 it was only the crucial moment before long tension on economies by too high oil prices…plus that absence of clearing in derivatives system…but all are speaking only about speculations bubles

  • In my opinion the reason for the financial crisis is a very complicated story (selling credit baskets with special purpose vehicles) which basically really intersts nobody as long as nothing really bad happens.

    The buyers were all institutional buyers. The interesting thing is that all those institutional byers did not get suspicous as they all have large departments for macroeconomical forecasts and risk management units.

    By the way: I am just reading your book and like most of your analizes but I will write more on that later.

  • “There’s not much a journalist can do, or anyone can do, when you don’t know what’s going on.”

    Fair enough. If you don’t have a clue about anything except following the breaking news and getting access and be called on at the press conference, it’s pretty hard to write an insightful interesting story about anything important.

    Face the facts, journalism, with a couple of exceptions has always been pretty awful. There was no golden era that is now slipping away because of the Internet or globalization or blablablab…

    For those of us old enough to have been reading in 1964,1965,1966, we know that the best reporting was done by IF Stone. “Blogging on paper.” The next best reporting was in Le Monde. the NY Times and the Washington Post. LOL.

    Now of course the great revisionist history is that Watergate was the high point of heroic journalism. Ok, it was pretty good. But without deep throat it was not going to happen. Meanwhile, while Nixon was obviously lying, spinning and creating the Imperial Presidency version I, where was our noble four estate.

    Please, enough of this self important bs. Newspapers sell real estate. The journalists lived off the rent. Every once in a while some great reporting happened.

  • Paul

    Well, gosh… lemme see if I can elucidate what I saw in the media.

    1) The financial crisis was greatly caused or at least triggered by the housing problem.

    2) The housing problem was caused by affirmative action efforts by Congress, once again trying to be social architects. The Democrats came up with the idea and pushed it hard. The Republicans did not have the backbone to tell the truth about it being a poor idea. Congressional hearings on the efficacy of the program were smothered in lies and wishful thinking.

    3) Perhaps not the financial media, but the more populist reporters were completely in the tank for Barack Obama. Hence, anything that looked like it would show the Democrats in a bad light (like the truth) was underplayed. Anything that could make W look bad was blown out of proportion. Hence, the congressional hearings warning of these problems years ago were only covered to the extent of Nancy Peloci et al saying it was working great. Meanwhile, BO gets away with the brilliant (sic) analysis that this is the worst economy since the great Depression. One might forgive him for not remembering the Carter economy, as he may well have still been an Indonesian citizen at the time, but the media continually allowed this lie to go unexamined for the entire campaign. Hell, he’s STILL saying it. At any rate, talking heads on TV are listened to my the great unwashed. A soundbyte by some annointed blathermeister gets heard while financial analysis requires attention and thought. Those two things are becoming a vanishingly small portion of politics today.

    which brings me to:

    4) For whatever reason, civics is no longer taught in school. There are millions out there who don’t know who is responsible for what. Most could not even name the three branches of government. Add to that the millions who are here illegally from dictatorial nations and one can see why so many people who vote think the President is to blame for everything and that the purpose of a Congressman is to bring pork home. (How many people realize that Senators are Congressmen, too?)

    The reason why real financial news does not get ou to the public is because it is not sensational or sexy, it can not be put to a hip hop rhythm, and rarely shows democrats in good light. Hence it does not get past the editors. That covers supply. The demand is not there because people have been told for decades that financial news is the news of the evil rich Republicans who are out to steal the food and belongings of the “little guy”. Hence the people who watch mainsteam hype media do not want to see financial news. Those who have any interest or are educationally prepared to understand financial news have long since found more credible outlets than Katie Couric.

    Financial reporters ought to understand supply and demand, eh?

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