What Ever Happened to Critical Financial Journalism?
Economic inequality, wage stagnation and too-big-to-fail bank dominance are all deservedly critical current topics in the developing presidential campaigns.
But what about the role of economic propaganda that still dominates the news and has worked to quash any public education and criticism of the U.S. financial system?
Most professional reporters who cover investments and finance are too close to their own professional and corporate cultures to recognize it, but the financial journalism spectrum is very limited in what it covers today.
With rare exceptions, the days when an aggressive trade publication or general interest newspaper criticized a banking practice or anti-consumer practices in the financial industry are long gone. Even financial beat reporters have become complacent, based on their published and broadcast work, when it comes time to interview an errant corporate CEO about their company’s bad actions against their own customers, the environment or in the cases of the too-big-to-fail banks, the entire global economy. Too many financial reporters don’t seem to recognize their own ideological biases or limitations.
But given today’s monopoly capital situation in the media industry, reporters themselves are far down the corporate totem pole when it comes doing their journalistic duties of objectively informing the public about the financial institutions which are working against individuals on a daily basis.
In most cases, editors and in the case of broadcast financial journalism, on-air personalities, now directly interface with their audiences to push the prevailing pro-capitalist mantra that free markets, trickle-down economics and the proven abilities of the wealthy are what is needed to push the U.S. forward into greater eras of unfettered prosperity.
But sometimes there are cracks in this façade which reveal the hollow interior.
One case involves Larry Kudlow of CNBC, who famously said in a 2012 Club for Growth panel discussion
regarding the historic price fixing of the London Interbank Offering Rate (LIBOR), that there were no victims.
Kudlow, a former economist with Bear Stearns, made this gross propaganda statement in defense of Barclays Bank around July 2012. In a short article in Slate.com, Elliot Spitzer called Kudlow out on protecting Barclays and was justifiably amazed that a CNBC anchor would knowingly try to mislead the public about the LIBOR price fixing debacle.
In the article, Spitzer quotes Kudlow as saying:
“I mean, maybe you’re right, the victim was the lender, Barclays. But I don’t know. The Justice Department says this could be a criminal prosecution. I don’t get that. Who are the victims? Who are the victims?”
For Kudlow to say there were no victims then is ridiculous. At other networks and in another time, it could have cost him his job and certainly his credibility. Yet the LIBOR scandal remains a hot topic today because the investigation of the price fixing is ongoing and the scope of the global scam has become more evident.
Kudlow certainly knew about the impact of LIBOR on international interest rate markets and the creditworthiness of major global banks. He may not have had the exact numbers, but basic research (if he had any ethical standards) would have shown that LIBOR controlled the rates in over $350 trillion in derivatives swaps contracts worldwide, including those managed by Fannie Mae and Freddie Mac (and most adjustable ARM contracts and other sub-prime mortgages), the TARP loans, the $40 billion in the Treasury’s purchase of AIG preferred stock, the Term Asset-Backed Securities Loan Facility (TALF), and covered everything from corporate borrowing to consumer auto loans to credit cards.
According to the author of the excellent book on this topic, Open Secret, Erin Arvedlund said LIBOR “had come to have the importance in finance of atomic time, of the longitude and latitude of the hemispheres.” Worse, the Fed and British banking regulators knew LIBOR was a fictitious number, but “a mix of fear, denial, and self-interest on both sides of the Atlantic left LIBOR in place,” Arvedlund wrote (page 65).
Yet with all the bank chatter about LIBOR being a fake number, including earlier articles in the Wall Street Journal a good four years earlier, Kudlow still insisted on making his naïve apology about “no victims” in the global price fixing case.
This was common knowledge. So why would Kudlow make such a public, naïve, intentionally misleading statement?
One clue may come from the broadcast financial media itself, which is overwhelming extremely economically conservative, pro-laissez faire and unquestionably accepts trickledown economics. Here, the majority of the more informed financial broadcasters (most often on CNBC, CNN and Bloomberg) reflect the preferences of their bosses who are unquestionably pro-corporate, pro-conglomerate, anti-regulation and dislike liberal, anti-monetarist, anti-Austrian School, Ayn Randian economists. (Not surprisingly, MSNBC, which bills itself as the “lean forward” Progressive network, glaringly fails to cover political-economy and as a result, is missing out on the biggest untold stories of the decade, while also failing to advance the Progressive agenda.)
But while newsroom cultures are easy to identify, they are very difficult to change, especially in the broadcast financial era of well-financed ideological journalism, job intimidation, pressure to fill 24-hour time slots with incessant banter and beating the competition.
Yet while there is a solid connection between commercial journalism and capitalism, classic journalistic practices based on democratic principles (as espoused by Walter Lipmann) taught reporters to be open to iconoclastic approaches, while presenting as many sides of an argument that were relevant and attributable to reputable sources. Too much of that is absent today. For instance, when was the last time a Marxist economist was interviewed on TV?
Instead, a discussion of newsroom cultures today trolls up a study of metrics based on a story’s popularity based on the number of website hits. These numbers even affect a company’s evaluation of its employees and whether some could be fired if their salaries did not meet basic standards.
In one study of a digital publication cited in the Columbia Journalism Review, a sociologist observed that “a team of writers fixated on attracting huge numbers at-all-cost, even to their emotional well-being.” She further found that “writers felt the need for quantity always hanging over them. Since traffic numbers varied wildly per post, writers pursued an approach similar to that for playing the lottery – to increase your odds, buy lots of tickets. None of this rewards creativity, or the thoughtful reporting and think pieces that Gawker’s sites have become known for. With traffic as the complete arbiter of merit, reporters responded rationally.”
Worse, relying on this raw data preserved the status quo since “with editors as the arbiters of what is news-worthy.” Given this situation, it’s no wonder stale political-economic ideologies persist along with intimidated and underpaid reporters failing to question authority for fear of losing their jobs.
In these cases, relying on web data only distracts from the larger problem that editors and reporters are now trying to be oracles to decipher the ever-changing public taste for interesting stories (no longer news) that have a shelf life of hours. Meanwhile, fundamental flaws in the political-economy go uncovered. When this happens, there is no outrage about Citizens United, the demise of pension plans, TARP fraud, LIBOR scandals, criminal bankers, for-profit jails, secret wars, and the list goes on. And where are the editors? Chasing down variations of pop culture.
The Sociology of News
So what happens in the news organizations that fosters and promotes non-critical thinking?
Academic papers on the sociology of news can shed some light on this topic.
From a sociologist’s perspective, some key ideas that play into the social forces that enter news organizations include the dominance of organizational routines; distinctive presuppositions about the nature and “properties of the features and processes of the economic world”; and French “economics of convention,” which is a way of converting “what might otherwise be radical uncertainty into a form of order that—while never unchanging—is stable and predictable enough to permit coordination and rational action.” (As cited in “The Credit Crisis as a Problem in the Sociology of Knowledge,” Donald MacKenzie, University of Edinburgh, May 2011.)
In another relevant paper, “What happens when news organizations move from “beats” to “obsessions”?
(September 2012) C.W. Anderson found that newsrooms adhere to “institutional homophily,” which occurs when “organizations charged with interacting with large bureaucracies often become bureaucracies themselves, because it makes the interaction easier. In other words, because so much of journalism has been dedicated to covering the activities of bureaucracies and bureaucrats, it made organizational sense for news companies to be bureaucratic as well.” This creates organizational behavior that can fall into non-questioning group think.
But many people have entered journalism because it had a “higher calling” than many other professions since it could shape the public good. (Many journalism schools saw enrollments swell after publication of “All the President’s Men,” about the Watergate scandal.
Anderson writes that “journalists understand how what they do adds value to the democratic public sphere.”
“But one of the things that makes journalists “professionals” is their belief that what they do has a public value that can’t be measured solely in terms of dollars. It’s the idea, common in many lines of work, of a ‘higher calling.’”
“This ‘higher calling’ usually consisted in the journalistic belief that news organizations monitored centers of power in order to keep corruption at bay and inform the public about the doings of government (and occasionally businesses and civil society organizations). This idea of ‘keeping an eye on those in power’ is usually what we’re talking about when we mention things like “the iron core of news” or ‘accountability journalism.’
“This belief had a corollary: the argument that because the public couldn’t keep an eye on government all the time (except during elections, and only then for a minute), the press had to stand ‘as a substitute’ for the public, informing that public about what they couldn’t see but occasionally acting in the public’s stead.”
These are powerful ideas, but sadly, there is not much of this in financial journalism today. Listening to CNBC, CNN and FOX financial reporters and propagandists like Larry Kudlow extol the unlimited benefits of capitalism, no regulation and laissez faire means there is less demand for reporters to pursue public accountability in financial reporting. This translates into less objective financial journalism which is happening at a time when the global financial system has been decimated by systemic frauds and scandals, accompanied by unprecedented taxpayer bailouts of private enterprise.
Maybe it’s long overdue to question the U.S. financial system. Financial reporters are in a great position to initiate that discussion.
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