Self-Fulfilling Prophecies

February 20, 2009 • Media Economics • by

Werbewoche, December 11. 2008

How will the business media handle our current recession?

Is the fall of the West imminent? Is the end of the world near? One might assume, given the media’s preference for apocalyptic conjectures, that Judgment Day is right around the corner.  Self-righteous ranting and moralizing function as special effects in the media’s production of Armageddon.

Journalism, deemed by many communications researchers as society’s early warning system, has closely observed the financial world for years.  Certainly there were Cassandras, but they were drowned in the flood of PR spin – spin which, these days, is transformed to “journalism” with the simple click of a mouse.

For a long time we were led to believe the bonuses awarded to investment bankers and financial jugglers were earned by achievement and high productivity, rather than high-risk bets. Even worse, it was considered “critical business journalism” when journalists encouraged UBS and other financial institutions to take on even greater risks. At least this is how media advisor Kurt W. Zimmermann, a former member of the board of one of the largest Swiss media companies Tamedia, used earlier quotes from Swiss business journalists to hold the mirror before them.

Have journalists and media researchers learned anything in the meantime? With their appetite for bad news – much like the bankers’ hunger for quick profits – will journalists finally concoct the giant catastrophe that might actually leads to their own downfall? Unfortunately, the media not only reports on the business climate, but influences it.

In a thorough review of the economic crisis which preceded the current one, the American Journalism Review (AJR) claimed in 2003 that the U.S. business press had acted pro-cyclical, rather than living up to its role as watchdog.

The American Journalism Review established that there had been a few critical voices in the business press, yet they were drowned out in the collective frenzy of unquestioning pro-business coverage. Using the Wall Street Journal, Business Week, and the Washington Post as examples, AJR was able to prove that wake-up calls had been provided. Long before the Enron and Tyco scandals, we were warned of fraudulent and shady book-keeping tricks. Unfortunately, however, no one woke up. In editorial departments, such warnings were lost in the cacophony of naive reporting about how “healthy” our system was, how we could trust financial analysts and auditors, and how the boom might continue and last forever.

Media researchers can be expected to arrive at similar conclusions when analyzing present economic and financial news coverage. It is perplexing how journalists seem to lack memory and how few, even from highly-regarded business newspapers, use their own research findings, despite vast electronic archives.

On the other hand, it’s fascinating to see who fuels crisis in the editorial office. In Germany’s top-ranking quality paper, the Frankfurter Allgemeine Zeitung, it is not the editor in charge of economics and finance but the feuilleton editor, Frank Schirrmacher, who prophetically “explains” current world events. He acts as an expert on banking and monetary issues, while at the same time adopting the role of polymath. Colleagues from the science department have already experienced before what the economy and finance journalists are experiencing now. When a topic – be it Mad Cow Disease, SARS or the subprime banking crises – comes to a boiling point, the specialty editors must surrender their interpretive power to the hierarchs in the political and cultural sections.

Surely the situation can worsen, as we’ve seen at the classy publishing house Gruner + Jahr, one of Germany’s finest sources of quality journalism. Here, business and finance journalists have been downsized and one editorial department now must handle four different business publications. What an upside-down world! And this is supposed to allow us the kind of “professional competence” in journalism we desperately need to cope with such a crisis?

Translation by Karin Eberhardt

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