Monday, September 24, 2012

How to define news, economically -- Part III

If news doesn't fit perfectly into a market for either goods or services, where does it belong? So far the only thing I've thought of is that it belongs in the same place as government.

Think of the police. What do we expect from them? Do we expect a good, as in a number of arrests or tickets? If so, that's faulty because then we're essentially creating crime by requiring a quota. Do we expect a service, as in protecting us from the bad guys? If so, we're going to be disappointed because it is impossible to predict when a crime will occur, and police cannot be omnipresent. And even when a crime is discovered, and sometimes even when the bad guy is identified, the criminal escapes or is never caught, and he gets away with his crime. And yet, despite not ever completely doing what we might expect them to do, nobody would say that we don't need police. And this is why police services are not bought and sold on the open market. We are charged taxes to pay for having police, and someone we elect makes decisions on how many police to have and how to deploy them. Public safety is a publicly funded, publicly run institution. A similar line of thinking goes for many other aspects of government.

Conclusion
So, IF we believe that timely information about current events is of value (perhaps the subject of debate for another three-part essay), then where does it belong, economically? Considering the ground I've covered so far, I see three options.

1. Leave it as is. The market for news will continue toward adverse selection, quantity over quality, with a few firms making guarantees to signal quality to the buyer. News organizations will continue to be trusted about as much as used car salesmen. But even then, profits aren't dependent on swindling people (as they are in used car sales) but on whether advertisers see any value in the dispersed, highly variable, fickle,  mistrusting, ad hoc audience that news tends to assemble. Prospects: Consumers aren't asked for much, so they're relatively happy, but the situation is not promising for news organizations.

2. Organize stronger public subsidies, but leave the news business in private hands. Similar to agriculture in the U.S. We want our news, so we'll subsidize you through the slow times on the understanding that you'll be a watchdog for us and kick into high gear when something big goes down. News organizations have quite a mixed track record in this regard. Prospects: News producers are much happier, but consumers aren't likely to think they're getting a good deal.

3. Make news public. Elect the editor in chief the way we elect the county sheriff. The news organization is owned by the government, yet expected to report on it, the way Congress appoints a portion of itself to investigate itself when it makes a mistake. Taxes pay journalists' salary, the budget it public just like for the city council or whatever. Prospects: News producers are most secure in this model, though they are likely to feel restrained. Consumers are now taxpayers, who have never quite been satisfied by how their tax dollars are spent, right?

There, finished. Anything I'm missing?

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