Self-fulfilling Prophecy
The longer the financial crisis lasts, the clearer it becomes: Instead of soberly assessing the situation, the media are topping each other with doomsday scenarios and thus becoming additional fire accelerators of the economic situation - and their own. Guest commentary by Stephan Russ-Mohl, head of the European Journalism Observatory at the University of Lugano.
Is the end of the world just around the corner? One could well think that doomsday has dawned, if one allows oneself to be sprinkled and intoxicated by all that is currently pelting down on us with all its (media) might in the press and on the talk shows. And the Last Judgment is also staged to great effect - in view of the self-righteousness with which many media people not only rant, but also moralize.
Journalism, which some researchers hastily proclaimed to be society's early warning system, has been watching from close range for years. Certainly, there were cries of doom - but they were drowned in the torrent of PR messages that are now transformed into "journalism" in many editorial offices at the click of a mouse. For far too long and again and again, it was proclaimed that all the investment bankers and financial jugglers had earned their dream returns and bonuses through performance and productivity increases instead of through high-risk bets. Worse still, "critical business journalism" has consisted of literally goading UBS and other financial institutions into taking even greater risks - at least that's how media consultant Kurt W. Zimmermann, formerly a member of Tamedia's executive board, recently held up a mirror to Swiss business journalists in Weltwoche, with quotes to back it up.
Have journalists and media managers learned anything in the meantime? It is to be feared that with their lust for "bad news," which is hardly less immoderate than the greed of many stock market players and bankers for quick profits, they are in the process of writing the really big crisis and thus their own downfall. The media not only report on the economic climate, they also foolishly create it.
In a thorough review of the penultimate crisis, when the New Economy Bubble burst, the trade journal American Journalism Review (AJR) had already certified in 2003 that the U.S. business press had tended to be procyclical instead of fulfilling its role as a watchdog. On the other hand, the journal also pointed out that there had been some critical individual voices. However, they were lost in the collective frenzy(s). Using the example of the Wall Street Journal and Business Week, but also the Washington Post, AJR showed that there were always "wake-up calls" during the boom years. Long before the Enron and Tyco scandals, there were warnings about fraud and dirty accounting tricks - but "nobody woke up. In the editorial offices, such warnings were lost in a cacophony of naive reporting about how "healthy" the system was, that financial analysts and accountants could be trusted in principle, and that the boom would last forever and ever.
It can be assumed that media researchers will come to very similar conclusions when they analyze current business and financial reporting. It is amazing how "memoryless" journalism works - and how little apparently even highly respected business titles use their own research findings, despite sophisticated electronic archives.
On the other hand, it is exciting to see who is fueling the crisis in the editorial departments: At Germany's No. 1 intellectual newspaper, the Frankfurter Allgemeine Zeitung, it is not the editor responsible for economics and finance, but the head of the arts section, Frank Schirrmacher, who prophetically "explains" the course of the world to us - as it were as an expert on banks and monetary matters and apparently the last universal scholar. The same experience that economic and financial journalism is now having to make has already been made by colleagues in the science department in the past: When a topic - be it BSE, Sars or now the subprime and banking crisis - really boils up, the specialist editors lose their power of interpretation to the hierarchies in the political and cultural editorial departments.
But things can get even worse, as can be seen at Germany's finest address for quality journalism, the Nobel publishing house Gruner + Jahr: There, the business and finance journalists are being completely rationalized away by having four business titles produced by one editorial team in the future. A topsy-turvy world! This is exactly the kind of increase in journalistic expertise that we urgently need to overcome the crisis...
Journalism, which some researchers hastily proclaimed to be society's early warning system, has been watching from close range for years. Certainly, there were cries of doom - but they were drowned in the torrent of PR messages that are now transformed into "journalism" in many editorial offices at the click of a mouse. For far too long and again and again, it was proclaimed that all the investment bankers and financial jugglers had earned their dream returns and bonuses through performance and productivity increases instead of through high-risk bets. Worse still, "critical business journalism" has consisted of literally goading UBS and other financial institutions into taking even greater risks - at least that's how media consultant Kurt W. Zimmermann, formerly a member of Tamedia's executive board, recently held up a mirror to Swiss business journalists in Weltwoche, with quotes to back it up.
Have journalists and media managers learned anything in the meantime? It is to be feared that with their lust for "bad news," which is hardly less immoderate than the greed of many stock market players and bankers for quick profits, they are in the process of writing the really big crisis and thus their own downfall. The media not only report on the economic climate, they also foolishly create it.
In a thorough review of the penultimate crisis, when the New Economy Bubble burst, the trade journal American Journalism Review (AJR) had already certified in 2003 that the U.S. business press had tended to be procyclical instead of fulfilling its role as a watchdog. On the other hand, the journal also pointed out that there had been some critical individual voices. However, they were lost in the collective frenzy(s). Using the example of the Wall Street Journal and Business Week, but also the Washington Post, AJR showed that there were always "wake-up calls" during the boom years. Long before the Enron and Tyco scandals, there were warnings about fraud and dirty accounting tricks - but "nobody woke up. In the editorial offices, such warnings were lost in a cacophony of naive reporting about how "healthy" the system was, that financial analysts and accountants could be trusted in principle, and that the boom would last forever and ever.
It can be assumed that media researchers will come to very similar conclusions when they analyze current business and financial reporting. It is amazing how "memoryless" journalism works - and how little apparently even highly respected business titles use their own research findings, despite sophisticated electronic archives.
On the other hand, it is exciting to see who is fueling the crisis in the editorial departments: At Germany's No. 1 intellectual newspaper, the Frankfurter Allgemeine Zeitung, it is not the editor responsible for economics and finance, but the head of the arts section, Frank Schirrmacher, who prophetically "explains" the course of the world to us - as it were as an expert on banks and monetary matters and apparently the last universal scholar. The same experience that economic and financial journalism is now having to make has already been made by colleagues in the science department in the past: When a topic - be it BSE, Sars or now the subprime and banking crisis - really boils up, the specialist editors lose their power of interpretation to the hierarchies in the political and cultural editorial departments.
But things can get even worse, as can be seen at Germany's finest address for quality journalism, the Nobel publishing house Gruner + Jahr: There, the business and finance journalists are being completely rationalized away by having four business titles produced by one editorial team in the future. A topsy-turvy world! This is exactly the kind of increase in journalistic expertise that we urgently need to overcome the crisis...
