Monday, April 29, 2013

Of Human Bondage

An increasingly unhinged Australian mainstream media, with a few honourable exceptions, has been revving up the scary-o-meter in recent days about this country facing a future of debt, deficits and public penury for as far as the eye can see.
“A decade of deficits spells a bleak future for Australians,” was the headline on the increasingly tabloid ABC television news, warning of a crisis bigger than the one where Bates went to jail in Downton Abbey.  I spluttered over my warmed up risotto (my lovely wife was out at the movies) and quickly checked my Bloomberg terminal.

Nope. No crisis. In fact, the bond market had rallied on the day of the announcement of a $12 billion worsening in the budget bottom line.  Yields had fallen. In bond market speak, that means prices had risen. In other words, more people wanted to buy our government bonds.  No fears, then, of a supply glut.

For those not familiar with public financing, the government meets the gap between revenues and spending by issuing bonds, a sort of publicly traded IOU. As Australia is one of only eight nations in the world rated the rolled gold ‘AAA’ by all three major ratings agencies, this makes our bonds highly sought after.

In other words, the big funds in London and New York look at Australia and see a virtual South Seas Switzerland – strong public finances, solid growth, low unemployment, low inflation, good yields and politically stable.

Clearly, then, these poor deluded souls wasting their billions are not listening to the ABC News or reading the front pages of The AFR (‘Budget Hole Hits $12bln). Perhaps, they were looking instead at Rupert’s US financial daily, that lefty rag The Wall Street Journal, which last year described the Australia Government’s ‘AAA’ debt one of the few safe haven investments left in the developed world.

You see, this is what happens when you let political journalists loose on an economics story.  For these people, bonds have something to do with the money they will forfeit for spilling red wine on the carpet of their 80s rented apartments in Belconnen. Economic literacy is not the gallery’s strong point. Easier just to reheat the talking points supplied them by the political short-order chefs.

Which is why the routine with budget stories is to wheel out Chris Richardson of Deloitte Access Economics, position him Moses-like on a grassy knoll overlooking federal parliament, and get him to dip into his bulging knapsack of mangled metaphors about various dire states of in-hockedness.

Some perspective, then. The shortfall in the budget is about 1% of GDP. What does that mean? Imagine you’re a two-income household earning about $200,000 a year. You’ve done the household budget. It’s not good. You forgot to include Jasmine’s school trip, which is going to cost $2,000. That’s 1% of your household GDP. Well, that’s the position Australia is in. Cue the violin sonatas.

And what about THE DEBT?  Another analogy: Your household income is $200,000. Your mortgage is $20,000. Yes, $20,000. You are no worse off than Australia the economy. Are you worried?

Now some more perspective. Australia has an unemployment rate of 5.4%.  In the US, the economy leading the world out of recession, unemployment is 7.7%, in our commodity cousin Canada 7.0%, in the European Union about 11%, in Spain 27%. You can see these numbers on the OECD’s website here.

Another fact: Before the GFC, Spain was an exemplar of fiscal rectitude. It was so parsimonious it would have had Chris Richardson writhing in think tank ecstasy. In 2007, Spain posted a budget surplus, the second largest in the Eurozone. Clearly, then, we can’t blame budget recklessness for Spain’s position now.

Since the financial crisis, Australia has gone from 15th to 12th largest economy in the world. In that time, 900,000 new jobs have been created. This is a period when in much of the developed world, millions of jobs have been lost and millions of lives destroyed.

Now think about what would have happened to our budget position if the government here had taken the austerity route – that is had worn the hair shirt recommended by the mean-eyed tailors of the media. Tens of thousands of people would have been thrown out of work. More unemployed means more social spending. Fewer employed means lower consumer spending.

What do you think happens to the budget in that scenario? A hint: Take today’s “black hole” and dig much, much deeper. Then throw into that hole the bodies and dreams of the lives destroyed by unemployment, failed businesses, faltering health and education forgone.

So forget the cute, faked up, political narratives. These are the facts. If there is a budget black hole that we should be scared about, the financial markets are not telling us so. In fact, they are sending the opposite message. In any case, the hole is not significant in the scheme of things. And finally, the damage – not just fiscal, but human – would have been far, far greater if we had listened to the punishers and straighteners now lecturing us from their privileged positions.

None of this is intended to deny we have budget challenges. But don't believe those who say it is due to "out-of-control" spending. As a proportion of our overall growing economy, our public spending has remained relatively constant. What's happened is we got a big, temporary pay rise in the early 2000s via the commodity boom and then we made permanent changes to the budget (largely via tax cuts and middle class welfare) that mean when revenues fall, as we are seeing now, it has a bigger effect on the bottom line.

Be aware, also, that the high-flying Australian dollar - which is defying the usual sell signals of falling commodity prices and narrowing interest rate margins - is acting on a brake on much of the trade-exposed parts of the economy. And that's affecting tax revenues as well.  As we saw, the Australian dollar is so high partly because we are such a model of fiscal virtue and good governance. People overseas want to lend to us. And that means the government is borrowing at an extremely competitive rate. It's a good credit risk.

The important point for the average person is a budget surplus is not an end in itself. If you buy the austerity doctrine, you end up like the poor souls in Spain. You can't eat budget surpluses. Good economic policy is about ensuring we grow our common wealth in a sustainable way. And that means keeping people in work, creating the conditions for business to flourish and ensuring a level of equity and justice.

You won’t read this in the newspapers, because it doesn’t suit the story they want to sell you. It requires an understanding of economics and how financial markets work. Most of all, it requires a sense of perspective, which is in short supply in much of our political journalism these days. Shame.

Sunday, April 28, 2013

Reinventing Journalism

It is a painful time for many journalists. Cast aside from the failing industry that used to provide them with a secure living, they are confused, frustrated and in some cases downright angry that society no longer seems to put a dollar value on the skills they worked so hard to perfect.

That the wounds of mass redundancies are still raw was rammed home to me last week when I took part in a panel at an inner Sydney hotel organised by the Public Interest Journalism Foundation (PJIF) to "share ideas and experiences around innovation in journalism".

"These ideas about new media are all very fine, but we need to know how we're going to earn a living," was  a common refrain from some of those attending. Others expressed concern that no New Media enterprise would have the commercial heft to protect investigative reporters against lawsuits aimed at suppressing accountability journalism.

Suffice to say it became clear fairly early in the piece that these journalists didn't see digital media as likely to provide them with a reliable living.

Also on the panel were journalist and publisher Anne Summers, former Sydney Morning Herald social affairs writer and now blogger Adele Horin and freelance journalist and new media trainer Lesley Parker. The panel was moderated by Melissa Sweet, public health writer, coordinator of the health blog Croakey and president of the PIJF.

Each of us described how we have practised our craft outside the mainstream media environment. Of course, in my case, I no longer make a living as a journalist. I have a day job in the financial services industry. The fact is this blog is a labour of love and was never intended as a commercial enterprise. So the question inevitably came: How can you, with your funds management gig, offer anything to unemployed journalists about making a living in a post-industrial media world?

It was a reasonable question and one for which there's no pat answer. But just because I no longer work in the mainstream media doesn't mean I no longer care about journalism and the important role it plays in society. In many ways, I feel I have done some of my most public-spirited work as a writer since leaving the media  - in my paying job helping to educate people about sound investment principles and through this blog on media and journalism.

I sympathise with the plight of journalists who've lost their jobs. It is a tough adjustment when an industry that's provided a reliable income for decades implodes. But the fact is the days of Big Media have gone.  The business model is broken. While digital experiments may yield marginal revenues, newsrooms inevitably will be smaller and involve much more multi-tasking. Even if they were offered jobs back in that environment, I doubt many of the older journalists would enjoy the new environment very much.

While they don't have to be "tech heads", journalists who want to reinvent themselves are going to have to learn how some of the new digital tools work. And those who make sniffy denunciations of social media, as if they are above it all, are also going to have to change.

The danger is that a lot of journalists will unnecessarily limit their post-industrial-media options by clinging to a narrow definition of journalism and undervaluing their skills in other environments as organisations like universities bring journalism in-house. Those skills, rare in the world outside the media, include:
  • communicating clearly
  • helping experts talk directly to the public
  • moderating and facilitating debate
  • building online communities 
  • aggregating reliable sources around public issues
  • providing relevant context and background
  • synthesising multiple strands of information into coherent narratives
  • finding relevant information quickly and efficiently
Those skills can be employed commercially. But they also can serve the public interest. To make it work in a way that generates a living will require a lot more cross-discipline collaboration than journalists are used to  - with technology experts, with marketers, with academics and with business.

Providing a practical insight at the PIJF event was health academic Professor Simon Chapman who spoke of his experience with Choice magazine more than a decade ago in developing online communities in which readers were active participants in the editorial process. Former Age editor Andrew Jaspan's successful experiment with The Conversation is an example of journalists helping academics sharing their expertise in areas of public interest more widely. Melissa Sweet told of her own work for conference organisers providing accurate and non-sensationalist reports direct to  audiences, particularly in remote and regional areas and without the need for mainstream media coverage. In the US, philanthropic efforts like ProPublica are gaining traction.

OK, none of these initiatives look like The New York Times.  But the cosy cultural cocoon of the newsroom has gone. And the defiant tribalism of journalism - of being perpetual outsiders - won't work in this post-industrial context. They're going to have to invite people inside the tent and develop a more collaborative, open form of journalism - one that involves less distance from the public and greater immersion in the conversation that we are all having.

Ultimately, public interest journalism has a value irrespective of price. But somehow we need to bridge the practical challenge of ensuring that those who serve the public through their journalism are rewarded for it so it can be sustained. Change will be difficult. And there will be lots of false starts and blind alleys. But I'm sure that the best way forward involves collaboration, patience and a readiness to reinvent journalism by rediscovering journalism.

(For an outsider's view of the Public Interest Journalism Foundation forum, see this account from political blogger Andrew Elder).

See also: New definition of Citizen journalism  - The Australian

Thursday, April 18, 2013

Media Stockholm Syndrome

'Twenty Ways to Bulk Up Your Cash'. That was the breathless headline in The Australian Financial Review on September, 27, 2005

 "It's shop till you drop for ordinary people with money to park," the article gushed. "And the range of investment options is so vast, it's very nearly an embarrassment of riches."

The most interesting trend, we were told, were nifty new high-yielding fixed income products called 'collateralised debt obligations' that had previously been exclusive to the big end of town but which were now available to retirees seeking higher yields to supplement their pensions.

But wait, there was more. Retirees worried about losing their dosh could buy capital protection by sinking their life savings into Asian hedge funds. Hubba Hubba!

Well, we know how that story ended. Those funky little securities - dubbed by Warren Buffet as weapons of mass wealth destruction - wormed their way into the global credit system and nearly blew it up, taking the savings of tens of millions of retirees and hard-working people with them.

Now, the causes of the GFC are complex and blame can safely be spread around reckless bankers, incompetent regulators, ratings agencies, rocket scientists and economists. But the financial press, supposedly a watchdog of the public interest against the shonks, deserves some scrutiny as well.

Is the financial media supposed to be a cheerleader for capital? Is its role primarily to act as a defacto marketing arm for the financial services industry to plug product to the "mums and dads"? Does it exist firstly to promote uncritically the agenda of business lobbies as synonymous with the public interest? It's worth asking those questions.

Indeed, the role of the financial media has been topical lately after a much read column by Fairfax journalist Paddy Manning who, at the cost of his job, blew the whistle on the erosion of editorial independence at the AFR, the rise of 'advertorials' (advertising dressed up as news) and a trend toward faked-up front page 'exclusives' that are essentially free PR for business lobbies and investment banks.
"The AFR’s business journalism is built on a fundamental contract between company and reporter: high-level access in exchange for soft coverage," Manning wrote. "Too often,  even for many of its own hard-pressed reporters’ liking, the result is PR-driven 'churnalism' which shows up as ‘drops’ ...'herograms’ for business leaders, unreadable roundtables and conference-linked spreads featuring plenty of happy snaps of business leaders with a glass of champagne or mineral water in hand.”
Manning is not alone in this criticism. And it is not coming from only one side of politics. Professor Sinclair Davidson, a conservative libertarian and senior fellow at free market think tank the IPA, has condemned creeping PR dressed up as business news and argues the AFR does itself no favours by being an uncritical cheer squad for one group or another.
"It  worries me – as an avid consumer of news and opinion – that the media should see its role as selling PR to its readership as opposed to providing a platform for advertising while providing news content," Davidson wrote in The Conversation. "Consumers should be as well-informed about business and economics as they are about politics. It is here that I think the Australian business media doesn’t serve its customers as well as it could or as well as it should."
To an extent, the financial press has always erred on the side of being too cosy with business. It's a professional hazard for journalists generally.  Long-term police reporters can end up identifying with policemen to the extent they write like one ('the offender decamped in a northerly direction'). Political journalists, stuck watching Canberra too long, can start to see the world through the lens of a party tactician and report politics as an end in itself.  And financial journalists can start to fancy themselves as investment bankers, economic gurus and business titans, despite having salaries a fraction of those they report on. (Christopher Skase took it a step further and actually became one).

This media version of Stockholm Syndrome results in journalists starting to see their roles (usually without being conscious of it) as unpaid spokespeople for the sections of society they report on. They come to imagine themselves as representatives of the milieu in which they move, their role being to advance uncritically the sacred cow concerns of business lobbies - productivity 'reform', lower and lower tax rates, deregulation and privatisation - regardless of whether or not it is good public policy. They mistake 'pro-business' for 'pro-market'.

This isn't to say that these calls by business should not be reported and that these arguments should not be made through the media. But it seems increasingly clear that many business and financial journalists see no wider public role in their reporting. They are there to advance the cause of business or to help investment banks ramp IPOs or to provide 'investors' (speculators) with stock tips or to move the market or simply to sell newspapers.  Some aspire to being an Alan Kohler or a Robert Gottliebsen, a guru perceived as having privileged information about the market.

But just as in other branches of journalism, the sense of a Fourth Estate responsibility - of holding the powerful to account and representing the interests of people as citizens (not merely as consumers or investors or shareholders) - is fading or non-existent, at least at an institutional level. This has little to do with individual journalists getting worse, in my view. But it's more a reflection of the economic pressures on the industry, the real-time nature of financial news that mistakes noise for signal (just as in politics), the growing complexity of finance, the competition from blogs and online tipsheets and the dwindling resources for thorough, fact-filled journalism.

Just after the 2008 financial crisis, London School of Economics professor Damien Tambini published a paper entitled 'What is Financial Journalism For? Ethics and Responsibility at a time of Crisis and Change' (PDF), Tambini argued that with the boundary between news, PR, spin and paid advertorial growing ever fainter, it was becoming even more imperative that journalists were consciously aware of and adhered to the supposed ethical responsibilities of their profession.
"Ultimately, do journalists have a broader professional duty to ensure that corporate malpractice comes to light, or is their role merely to provide whatever their readers want?" Tambini asked. "And are those readers basically to be addressed as real or potential investors or as citizens with a variety of views?"
 Clearly, the AFR has decided to tailor the newspaper to a single view of the world. That may win them a few friends at the big end of town. But as a former financial journalist who now works in the financial markets, I've encountered a breadth of opinions about the economy, tax, industrial relations and climate change that belies the assumed Cycloptic worldview of the Fin's front page. Long term, that can't be a good business strategy.

Catering to a single class with a single ideology also ignores the millions of Australians who have a stake in the financial system through their superannuation, their jobs, their mortgages, their taxes, their business and credit card loans and all the risks piled ever higher onto their shoulders by a capitalist structure that so often patronises them as dumb consumers, passive 'mums and dads' and suckers to be sold another dud.

Who looks after these people? Who argues their corner, if not financial journalists?

Sunday, April 7, 2013

Freedom for Whom?

Freedom! Is there any word more abused than this in the debate about politics and media standards? From Rupert Murdoch, his editors and commentators and the ubiquitous IPA, the rhetoric of 'freedom' is now ritually used to forestall any examination of media power.

This American style hand-on-heart eulogising of freedom reached a crescendo recently with the failure of the Gillard government's media reforms. Having gone as far as sending its own representative to make a submission at the Senate hearing into the legislation, the IPA predictably released a statement  welcoming the ditching of the reforms as a "victory for freedom of speech in Australia".

As always, though, freedom is never clearly defined by the conservative forces mouthing it as a principle. Instead, it serves for them as a useful "feel good" term that no-one in their right mind would ever consider circumscribing. Indeed, it helps the commercial interests of the shady forces they represent to conflate every attempt to improve media standards and public accountability with a threat to freedom.

So what is achieved is a confusion in the public's mind about freedom of speech, freedom of thought and expression, traditional press freedom and the neo-liberal concept of freedom of the market. It's deliberately woolly rhetoric and it results in people rallying around somebody else's flag. Which is why it helps to define terms first.

 In the report of Lord Justice Leveson, the man who conducted the UK media inquiry, freedom of the press and freedom of speech are defined as two quite different concepts:
"Freedom for commercial mass media businesses (‘corporate speech’) is a very different proposition from the freedom of individual self-expression (‘personal speech’). The latter....has its roots in a very personal conception of what it is to be human...This argument has no direct relevance to press freedom because, put simply, press organisations are not human beings with a personal need to be able to self-express. In any event, an argument for free speech for the powerless will not make a case for free speech for a powerful organisation."
So if the principle of defending media freedom does not equate to freedom of speech, what are we defending here? The most common arguments are that the media has a special role in holding the powerful to account, in representing a diverse range of opinions and, at its most essential level, in providing the public with accurate information so it can make fully informed decisions in a democracy.

Yet it is notable that in all their carefully engineered hysteria, the Freedom Squad have steered clear of any examination over whether those important and valid roles of the media are being performed  adequately.  It is easier to stand on a soapbox, print photoshopped caricatures and chant about threats to freedom than to examine whether the mainstream media is doing its job properly - publishing accurate information, providing a diversity of views and holding power to account, including the power of the media itself.

Woefully unreported in all the recent tennis match coverage of the aborted media reforms ('how will it play in the opinion polls?') was the thoughtful testimony of Press Council chair, Professor Julian Disney, to the Senate hearing on the legislation. Disney made the point that press freedom does not exist in isolation and is about much more than "we can say whatever we like". For freedom to exist, Disney says, people must be given accurate information, a point he reinforced by noting that Australian newspapers could not even be trusted to report his council's adjudications accurately.
"If people are to have freedom of expression, they need access to reliable information. If they are fed false information, then the views that they form and they might want to express will not be the views that they would form and express if they were well informed. Access to unreliable, distorted information is an attack on freedom of expression."
In this way, poor media standards - as we have seen in the continuing distorted, deceitful and manipulated coverage of the media reforms in the Murdoch press - are a bigger threat to this society's freedoms than anything we have seen from the Gillard government.

Meanwhile, real threats to journalistic freedom - as we are seeing now with five Australian journalists facing court action to reveal their confidential sources by Gina Rinehart and others - receive only fleeting coverage in the same newspapers, if at all.

So it seems clear that the fist-pumping editorialising of our media about their service to democracy is really a self-interested device to mask their own untrammeled power, and their role as players pushing the ideological and commercial interests of their proprietors. The 'freedom' they espouse is really the freedom of the market, not a civic concept, but one purely related to capitalism.

Nowhere is it countenanced that a highly concentrated media - as we have in Australia - can just as easily be a malevolent influence on democracy by deliberately misinforming its readers to further its own agenda , by using its power to slur and silence its critics and by thwarting attempts to improve accountability.

Ultimately, freedom cannot exist on its own. It requires truth and justice also to prevail. But you won't see the Murdoch press and the IPA championing those ideals.