The limits of market incentives and the death of journalism

Over at Mr Denmore I commented on this post, which referred to an Annabelle Crabbe speech in which the the celebrated leaking of the federal budget in it’s entirety is named as part of the rich experience of journalism which we should be valuing. Forgive my self indulgence as I quote myself?.[fn1]

Its always important to remember that what we call capitalism isn’t just markets. A massive chunk of economic activity by individuals aredetermined by settings and organisations that idividuals are in. One of the most important, and the relevant one here being firms. Activity within a firm is determined by firm culture and hierarchy, and not market exchange, even though the ostensible purpose is to allow the firm as a whole to act like an individual in the market (that is, pursue profit and some degree of approbation). It is equally clear that this isn’t the case. There’s obvious examples, like CEOs enriching themselves at the expense of the firm as a whole because material incentives are out of whack. But the cultural incentives (approbation from peers and supervisors) are just as perculiar and distortionary (and they impact on the way material incentives are set out).

The Oakes example is a massive example of how strongly approbation is given to priority over quality, and to the use of the traditional tools of the trade – like leaks – over the product the tools actually produce and what is desired by customers.

I wonder how long such a culture can sustain itself. Of course the people who reach higher parts of the hierarchy and get to dictate policy got there because of the adherence to existing norms, so to disabuse them would be to disabuse themselves. And the media is oligopolistic, so there’s little chance one organisation, stumbling onto something customers want will show up the others. And Australia in particular has media barons [fn2] who are happy to subsidise a loss making venture in return for an agenda.

Thus they can go on, interviewing each other, congratulating each other on their use of useless techniques, giving each other Walkley’s and grumbling about the armchair critics (aka customers). Hell, when you don’t need to deal with the Australian public you can go on making silly remarks about Latte drinkers.  If in TV you probably have a team down the hall trying to respond to the success of the demographically representative Masterchef – “You know what there’s not enough of on TV? Anglos! We can do a cooking show with Anglos!”.

But man, it can’t go on forever. Pockets aren’t infinite. Which will come first? Will hard nosed private equity types (like those that own Channel 9) click that they might actually make money if they responded to customers desires? Will paywalled internet also produce enough price signals to indicate what customers actually want (since papers and bundled I doubt it)?

Or will they just fade away, peaceful in the knowledge they have withheld the traditions of their professions against the ignorant consumer?

[fn1] Consider it the future. I was wrong that Omega Journalism would be journalists reporting on journalists, it can be one person reporting on themselves.

[fn2] I do like the fact they are either barons or moguls. Lords of feudal or caste heirarchy from the middle ages rather than from the market. It is very appropriate.

About Richard Tsukamasa Green

Richard Tsukamasa Green is an economist. Public employment means he can't post on policy much anymore. Also found at @RHTGreen on twitter.
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The Beverage Curve
The Beverage Curve
11 years ago

What is always forgotten is this leaking of the budget enabled a large rise in tariffs to be overlooked.


Mr Denmore
Mr Denmore
11 years ago

Richard, your remarks on my post about the eulogising of the Oakes budget leak inspired me to write another about the fetish over speed, which has always been there, but which now has reached pathological proportions and incorporates the entire media – not just the traditional outlets that could publish any time (radio and wire services).

But you are right about the cultural incentives within journalism that reward mindless one-upmanship over who was first with a story that was going to enter the public domain anyway. I make the point that journalists on the one hand complain about their lack of resources while running themselves ragged providing instant updates on stories beyond the capacity of their audience to absorb it.

I’m sure there is a perfect correlation between the increasing focus on speed and the decreasing degree of context in news stories.

See Last and Curious