Media and corruption


 * This essay is on Wikiversity to encourage a wide discussion of the issues it raises moderated by the Wikimedia rules that invite contributors to “be bold but not reckless,” contributing revisions written from a neutral point of view, citing credible sources -- and raising other questions and concerns on the associated '“Discuss”' page.

Research on political corruption suggests that a primary contributor to good governance (and through that broadly shared economic growth) is a free press that informs and invigorates lively but respectful political discourse and high electoral participation. This essay summarizes this research, recent trends in media ownership and investigative journalism, and increasing problems with crony capitalism. This includes research documenting a gap in political knowledge between the US and Europe, and things people can do today to help improve democracy in the U.S. and elsewhere.


 * Bottom line: Lower quality local news leads on average to fewer people filing to run for political office, lower voter turnout, less spending on political campaigns, politicians who don't work as hard for their constituents, and an increase in the cost of government.



Better media means less corruption
Econometric research has found that countries with greater press freedom tend to have less corruption. Conversely, a study of “The Impact of Newspaper Closures on Public Finance” concluded that “Financing Dies in Darkness”. More specifically, “borrowing costs increase by 5 to 11 basis points in the long run.” Regarding corruption and economic growth, Aghion et al. conclude that, "Reducing corruption provides the largest potential impact for welfare gain through its impact on the uses of tax revenues."

Greater political accountability and lower corruption were more likely where newspaper consumption was higher in data from roughly 100 countries and from different states in the US. A "poor fit between newspaper markets and political districts reduces press coverage of politics. ... Congressmen who are less covered by the local press work less for their constituencies: they are less likely to stand witness before congressional hearings ... . Federal spending is lower in areas where there is less press coverage of the local members of congress." This was supported by an analysis of the consequences of the closure of the Cincinnati Post in 2007. The following year, "fewer candidates ran for municipal office in the Kentucky suburbs most reliant on the Post, incumbents became more likely to win reelection, and voter turnout and campaign spending fell.

An analysis of the evolution of mass media in the US and Europe since World War II noted mixed results from the growth of the Internet: "The digital revolution has been good for freedom of expression [and] information [but] has had mixed effects on freedom of the press":  It has disrupted traditional sources of funding, and new forms of Internet journalism have replaced only a tiny fraction of what's been lost.

Social media is great for “microsegmenting” the audience for the benefit of advertisers. This exploits fundamental defects in how people think and make decisions, documented in Thinking, Fast and Slow, summarizing the research for which won the 2002 Nobel memorial prize in economics -- even though he's a psychologist, not an economist. The results can be alternatively described as “Balkanizing” the body politic for the benefit of selected elites, reflected, e.g., in the Brexit vote and the 2016 US presidential election: But it's not just Cambridge Analytica:  These techniques are employed by other companies and possibly also by cyberwarfare units of the militaries of major countries.

Trends in media ownership and investigative journalism
The ownership of the media have become increasingly concentrated in recent decades. Since 1997, the number of media conglomerates decreased from fifty to five. In the US, a "five-year study of investigative journalism on TV news completed in 2002 determined that investigative journalism has all but disappeared from the nation's commercial airways. Many journalists have moved to "public relations," where they now write "press releases" favoring their clients. In 1960, there was one PR specialist for every professional journalist in the US;  in 2012, there were four PR specialists for every journalist. Research in the US, Britain and Australia found that over half of reports in leading newspapers and television "were based solely on press releases", a phenomenon called churnalism.  Meanwhile, the average daily audience for television news in the US fell from 52.1 million in 1980 to 23.2 million in 2010.

While the funding and the audience for television news and newspapers has been declining, non-pofits devoted to investigative journalism are attempting to fill this gap. Some are members of the Institute for Nonprofit News (INN) and / or the Online News Association (ONA). However, their funding is less than a tenth of the "estimated $1.6 billion in annual reporting and editing capacity" of the US (roughly 30 percent) lost between 2000 and 2011.

Herman and Chomsky claimed that the mainstream media exist to manufacture consent for the elite consensus. Media organizations sell behavior change in their audience to their funders (advertisers for the commercial media). Many advertisers perform experiments, advertising in some markets but not others. This allows them to measure the behavior change they purchased.

One result of this trend is a decrease in knowledge of current affairs in the US relative to Europe documented in surveys summarized in the accompanying figure. College graduates in the US were answered correctly roughly 70 percent of questions about political issues as people with the equivalent of high school in Denmark and Finland, while high school graduates in the US could only answer roughly 30 percent of the same questions. The primary difference was funding for mass media, according to McChesney and Nichols (2010): This was $1.35 per person in the US in 2007 vs. the equivalent of $101 in Denmark and Finland. The United Kingdom was in between: They spent the equivalent of $80 per person, and Brits with roughly 12th grade educations correctly answered almost 60 percent of the questions on average.

This does not mean that the government should decide which media organization should get government subsidies. Rather, it suggests that any nation that values democracy – and reductions in political corruption – should find a way to subsidize mass media. This supports concerns expressed by the founders of the new United States when drafting its current constitution in 1787: The founders believed that the new republic might not survive without vibrant political debate among voters. To encourage this, the founders provided exceptionally low postal rates for newspapers delivered by the new U.S. Postal Service. Various systems have been proposed for increasing citizen involvement in funding investigative journalism; these will be discussed further after an enhanced description of problems with crony capitalism.

Crony capitalism
The previous section discussed how advertisers get a return on the investments in marketing communications. But major advertisers want more than merely selling more products or services: They don't want to feed the mouth that bites them, e.g., by publicizing their efforts to obtain favors from government. They also don't want information disseminated questioning product or workplace safety or environmental problems associated with their operations. Conservatives like Grover Norquist and liberals like Ralph Nader agree that crony capitalism / corporate welfare should be limited. Estimates of the cost of crony capitalism in the United States have ranged from $100 billion per year ($1,200 per family per year) to $39,000 per family per year (over $100 per day). For example, US anti-trust law requires congressional approval of major corporate mergers and acquisitions that might reduce competition. These mergers are usually approved without substantive analysis or commentary disseminated by major media outlets. These mergers and acquisitions have made it easier for the larger corporations to engage in numerous activities not available to smaller competitors:
 * Larger corporations often export profits to low-tax countries.
 * Larger companies can more easily obtain subsidies from governments eager for new facilities on the claims of increased employment often fail to provide the promised benefits the big businesses claim.
 * Fewer producers means higher prices for consumers.
 * Fewer employers means reduced competition for labor and lower wages.

Media and US law


The US tax code and other laws are written primarily of, by and for major political campaign contributors, and very few details of this process are exposed by the media.

Data from the Tax Foundation plotted in the accompanying figure shows that US tax law and regulations currently exceed 10 million words and has been growing at the rate of roughly 150,000 words per year at least since 1955, when this number was just under 1.4 million words. Something happened between 1945 and 1955 to dramatically increase the rate at which new words have been added to the tax code. To see this, we note that If we extend this trend backwards from 1955, we get a negative number of words in tax code and regulations in 1945. That's clearly incorrect.

It would be interesting to understand what happened to increase the rate of addition of new words. One fairly obvious explanation is that big businesses in that period found that a way of dealing with the high official tax rates of that era is to lobby for special exemptions for their industry or business. The media play a role in this by only rarely reporting on any of the details. As with Trump, they have a conflict of interest in providing balanced news coverage of this and any other favors big businesses try to get from government: It's hard to get repeat business biting the hands that feed you. Beyond that, the major media conglomerates in the US are primary beneficiaries of this resulting political corruption.

Media and economic growth
More subtle and insidious are the reductions in economic growth that flow from reduced spending on new products and processes that typically follow major mergers. Similarly, changes in copyright laws in recent decades have made it easier for media giants to prevail in strategic lawsuits against public participation. For example, attorneys for MP3.com were sued because they "should have known" that customers could not legally use MP3's service to access in different ways music they had already purchased. Venture capitalists supporting Napster were sued for essentially the same reason.

The supporters of MP3 and Napster lost not on legal merits but because they did not have the millions of dollars a legal defense would have required. Constitutional law scholar Lawrence Lessig suggested that this stifles innovation, thereby slowing economic growth, the exact opposite of the letter and intent of the Copyright Clause of the U.S. Constitution. (The Supreme Court denied Lessig's constitutionality argument.)

Seemingly minor differences in rates of economic growth can convert a technology leader to a follower and vice versa after a few decades. Leaders tend to enjoy higher rates of employment in higher quality jobs.

Media and national defense
The US system of funding media from advertising may also substantially increase the cost of national defense and foreign policy by making the world more dangerous. This claim is so different from the mainstream that it requires substantial justification. One example is the "935 lies" by seven of the top Bush administration officials that justified the 2003 US-led invasion of Iraq. In disseminating those lies major media might be described as cheerleaders to the point that leading media personalities were fired for trying to provide air time to experts who claimed that there was no evidence that Saddam Hussein had the weapons of mass destruction (WMDs) that were the official reason for the US-led invasion. After coalition forces failed to find evidence of the WMDs, President Bush jokingly looked for WMDs under his desk in the Oval Office.

More recently the official UK Iraq Inquiry, published 6 July 2016, concluded that the Blair government had overstated the threat from Saddam Hussein. In so doing, it contradicted the Hutton Inquiry, whose finding supporting Blair led to the resignations of Gilligan, Davies and Dyke.

The G. W. Bush administration's claims of Iraqi WMD were out of date but otherwise not without merit: An episode of Frontline that originally aired Sept. 11, 1990 (a decade before G. W. Bush's election) documented how the U.S. and European governments, as well as Western corporations, helped Iraq build a "massive arsenal of tanks, planes, missiles, and chemical weapons during the 1980s." These weapons were used against US troops in the 1990-91 Gulf War, as documented in the 1994 Riegle Report of the U.S. Senate Committee on Banking, Housing, and Urban Affairs with Respect to Export Administration.

The point here is that the mainstream commercial media in the US had a conflict of interest in disseminating information about this in the 1980s: Some major advertisers were making money from direct sales of military technology to Iraq. The positions of other business leaders are less clear.

However, many US business leaders were probably happy to see the 1953 Iranian coup, which replaced a democratic government there with the Shah, because the democratic government had confiscated the property of the Anglo-Persian Oil Company (APOC). The Iranian government justified its actions by pointing to the refusal of the APOC to to submit their financial accounts for an audit, and the Iranian government believed that the APOC had paid them substantially less than their contractual obligation.

US international business interests were almost certainly threatened by the expropriation and likely happy to see the democratic government replaced by the autocratic Shah. The 1953 Iranian coup is rarely mentioned in the US media, and when it is, the refusal of APOC to submit to an audit is rarely if ever mentioned. To do otherwise could offend people in major businesses who control substantial advertising contracts with major US media corporations. Similar things could be said about the 1949 Syrian coup, as the democratic government it replaced had opposed the Trans-Arabian Pipeline. The Syrian portion of that project was quickly approved by the new government.

The Wikipedia article on "Covert United States foreign regime change actions" lists five democracies destroyed by coups secretly organized by the US. Among repressive regimes, the U.S. has traditionally supported those considered friendly to U.S. international business interests and opposed those that seemed more concerned with the welfare of their own people, as suggested by the Wikipedia article on "United States support of authoritarian regimes".

City of Bell scandal
A striking example is the City of Bell scandal: Bell, California, is a city of some 35,000 lower middle class area in Los Angeles County. Around 1999 the local newspaper died. At that point, in essence, the City Manager decide, "Wow: The watchdog died.  Let's have a party." By 2010 the city was almost bankrupted in spite of having some of the highest tax rates in the nation. The City Manager reportedly had the highest income of any public employee in the nation, over a million dollars a year, over double the salary of the President of the US. The Chief of Police and many of the members of the City Council had similarly outstanding compensation packages. Around that time, some investigative journalists started reporting on the situation, and the city now has a different City Manager, Chief of Police, and Council.

Policy implications
The previous analysis suggests that the world needs more substantive investigative journalism to question crony capitalism in real time and encourage responsible citizens to demand more careful evaluation of critical issues that benefit those who control advertising and political campaign budgets against the interests of the rest of humanity.

If the previous analysis is accurate, it validates Thomas Jefferson's observation of a tendency for "The functionaries of every government ... to command at will the liberty and property of their constituents. There is no safe deposit [for liberty and property] without information. Where the press is free, and every man able to read, all is safe."

This analysis suggests that concerned individuals may wish to consider the following policy issues:


 * 1) Net neutrality:  The Internet gives voice to the voiceless in ways that challenge existing elites.  It has been used to disseminate hate speech as well as more constructive political messages and to help people organize for good and ill.  Mainstream media have been losing audience share to new (Internet-based) media.  In addition to the direct threat to the existing mainstream media, this poses an indirect threat to other elites who have relied on the dominant media to manufacture consent for their programs.  If net neutrality is blocked, it will reduce the prospects for democracy and make it easier for traditional demagogues blessed by the established media to stampede the public into ill advised actions.
 * 2)  Protect journalists:  US journalist James Risen has been threatened with imprisonment for refusing to identify sources for some of the things he has published. Obama administration officials who tried to imprison Risen claimed that his actions threaten national security.  A counter argument asserts that Risen's and similar publications threaten national security less than the secrets they exposed (e.g., US complicity in coups like those described above).
 * 3) Citizen funded journalism: The survey results cited above suggests a need to increase funding for investigative journalism in the US from the current $1.35 per person per year to something closer to the $101 in Denmark and Finland – or even higher – but to do it in a way that limits the ability of politicians to punish journalists who expose too much.  This can be done in various ways including counting valid clicks on web sites and providing tax rebates or matching funds for small dollar contributions to organizations devoted to investigative journalism.  Bruce Ackerman proposed "Internet news vouchers" that ask Internet users to "click a box whenever they read a news article that contributes to their political understanding.  ... [A] National Endowment for Journalism ... would compensate the news organization originating the article on the basis of a strict mathematical formula:  the more clicks, the bigger the check from the Endowment."  Dan Hind proposed "public commissioning" of news, where "Journalists, academics and citizen researchers would post proposals for funding" investigative journalism on a particular issue with a public trust funded from taxes or license fees.  "These proposals would be made available online and in print in municipal libraries and elsewhere. ... The public would then vote for the proposals it wanted to support. McChesney recommended "letting every American of the age of eighteen direct up to $200 of government money annually to any nonprofit medium of his or her choice.  The only conditions would be that the recipient be a recognized nonprofit, that the recipient do no commercial advertising, and that whatever is produced by the subsidy be posted online immediately, made available at no charge, and enter the public domain."  McChesney and Nichols noted that Generals Eisenhower and MacArthur forced the German and Japanese governments after World War II to subsidize investigative journalism, which they still do.  In the summer of 1945, Eisenhower “called in German reporters and told them he wanted a free press.  If he made decisions that they disagreed with, he wanted them to say so in print.  The reporters having been under the Nazi regime since 1933, were astonished”.  McChesney and Nichols compared that with the occupation of Iraq following the US-led overthrow of Saddam Hussein, which accepted no criticism. If the analysis of this essay is accurate, the lack of a free press in Iraq since 2003 has contributed materially to the current problems in that region.
 * 4) Restrict secrecy:  Leading government officials claim that their effectiveness in crafting public policy is substantially reduced by excessive interference from concerned citizens.  Many international agreements may not be possible if the negotiators cannot keep secret their negotiating strategy.  With logic like this, the G. W. Bush and Obama administrations have claimed that national security would be jeopardized if current draft trade agreements were published.  Of course, major campaign contributors have access.  While this raises questions about the meaning of "national security," classification decisions can only be challenged in three ways:  (a) Congressional oversight committees, who rarely do so out of fear of being shunned by campaign contributors or pilloried in the media.  (b) Journalists, whose only protection is the hope that an engaged electorate will make it politically unacceptable for attorneys general to prosecute.  (c) Whistle-blowers willing to put their lives on the line to place their oath of office, "to protect the constitution," above the risks of imprisonment or exile.  Because of the 1953 U.S. Supreme Court decision in United States v. Reynolds, judges in the U.S. do not allowed defendants or plaintiffs to challenge administration assertions of national security.  This is a problem, because history records numerous examples where claims of national security were fraudulently used to cover up ineptitude and criminality.  If the previous analysis is correct the vast majority of humanity would be better off if plaintiffs and defendants were allowed to challenge claims of national security.

How can humans combat crony capitalism?
The above analysis suggests that crony capitalism is a major problem, and the primary antidote is to increase both the demand for and supply of investigative journalism. How can this be accomplished?


 * 1) Protect net neutrality:  An important current issue is the current attack on net neutrality represented by Verizon Communications Inc. v. Federal Communications Commission (FCC) and the January 14, 2014, decision by the U.S. Court of Appeals for the D.C. Circuit that vacated portions of the FCC Open Internet Order 2010.  The FCC responded by issuing a tentative ruling to allow Internet service providers like Verizon to provide different levels of service, with faster delivery speeds reserved for web sites that would pay extra.  A primary question (as of fall 2014) is whether Internet Service Providers are "common carriers" or "information services":  Since the 1960s US law has prohibited "common carriers" from providing different levels of service to different users.  If ISPs are "information services," they can charge content providers for delivering their data to end users.  The major ISPs are oligopolies that already have allegedly abused their powers in ways that harm consumers.  Proponents of net neutrality claim that the abuse will get substantially worse if the FCC classifies ISPs as "information services".  Concerned citizens can support organizations actively working to block this ruling.  Some of the organizations leading protests against the proposed rule (and supporting net neutrality more generally are Fight for the Future, battleforthenet.com, FreePress.net, Electronic Frontier Foundation, Demand Progress, Common Cause, and United Republic.
 * 2) Protect journalists:  The closer investigative journalists get to exposing questionable practices in government, the more dangerous their work becomes.  Concerned citizens can get involved with organizations concerned with protecting journalists such as Freedom of the Press Foundation, the Electronic Frontier Foundation, IFEX, the Committee to Protect Journalists, and Reporters Without Borders.
 * 3) Citizen funded journalism:  Unlike the other implications suggested by this analysis, proposals for citizen funding of journalism have so far not generated a substantive grass roots movement in the US.  Many independent investigative journalism organizations belong to the Investigative News Network and the Online News Association.  Organizations concerned about this issue include Free Press, which has organized the National Conferences for Media Reform.  Citizens concerned about this issue can also support other electoral reform initiatives including the following:  (a) Overturn the Citizens United decision of the US Supreme court.  Move to Amend is focused solely on this issue.  Many other organizations support a range of proposals in that area.  (b) Greater transparency in how political campaigns are funded such as the DISCLOSE Acts that failed in the 111th and 112th Congresses (2009-2012) and counterparts at the state level. (c) Improve the availability of data on campaign finance and lobbying;  for sources of data on this, see the "Sources of data" section of the Wikipedia article on Campaign finance in the United States.  Without waiting for substantive changes in how elections and media are funded individuals can ask more questions about the funding of the media they consume.  They can consume less media funded by advertisers and more media funded by individuals and foundations that seem more concerned with reality than a political agenda.  Individuals can also seek vigorous but respectful political discourse with people with whom they may not agree.  Nader's book "Unstoppable" describes many examples of Left-Right alliances "to dismantle the corporate state". Many of these were blocked by corporate propaganda.  Nader describes ways that common citizens can collaborate effectively with those of other political persuasions on issues of common concern.  Let's make "talking politics" the national (or international) sport.  To do this, we must learn to listen without judgment, to accept others where they are, and look for common ground without trying to convince the others that our "truths" are better than theirs.
 * 4) Socialize Internet monopolies and oligopolies that threaten democracy:  Markets dominated by monopolies, oligopolies and cartels are not free. Media scholar Robert McChesney said that the Chicago school laissez-faire champion Henry C. Simons “argued that it was imperative -- for both genuine free enterprise and democracy -- that monopolistic firms be broken into smaller competitive units, or, if that was impossible, as with utilities and railroads, that they should be 'socialized' and directed by the government in a transparent manner.”  McChesney said we should “End the ISP Cartel” and socialize the “monopolistic titans like Google, Apple, Amazon, Facebook, eBay, Microsoft, Intel, Cicso, Oracle, and Qualcomm,” following Simmons' recommendation. McChesney claimed that Verizon, AT&T and Comcast “dominate the field of telephony and Internet access, and have set up what is in effect a cartel.  They no longer compete with each other in any meaningful sense.  As a result, Americans pay far more for cellphone and broadband Internet access than most citizens in other advanced nations and get much lousier service.  'They're making a ton of money,' one telecommunication executive said about the cartel members in 2013.  'They're picking the pockets of consumers.'” “These are not 'free market' companies ... .  Their business model ... has always been capturing government monopoly licenses for telephone and cable TV services.  Their 'competitive advantage' ... has been world-class lobbying.  It was that power that made it possible for them to merge endlessly into corporate goliaths and permitted them to quietly overturn existing regulations a decade ago”. The public interest community has responded to this cartel in a number of ways, most specifically in pushing for net neutrality and in creating local government owned ISPs.  A “2014 report by the United States Government Accountability Office (GAO) concluded that municipally owned ISPs offer higher speeds at lower prices ... .  Wherever these systems exist they have proven to be very popular across the political spectrum, and especially with small business owners.  “The cartel has passed its historical expiration date.  These firms are parasites that use their government-created monopoly power to exact economic 'rents' -- by which economists mean undeserved income -- from consumers and other businesses.  Let's cash them out at a price that reflects actual investment, not speculative frenzy.  Then let's make cellphone and broadband access ubiquitous and as close to free as possible.  ... We have a terrific proven model to start with from municipally owned broadband systems. McChesney noted in particular one immediate benefit of converting Google to a nonprofit entity: “the incessant commercial pressure to collect every possible bit of information on users to better manipulate them would be undermined.  It would be far easier to have a regimen with standards closer to what was imagined by the engineers who created the Internet:  power would be in the hands of the users, who would control their own digital fate, rather than in the hands of giant firms that are mostly unaccountable”.
 * 5) Restrict secrecy:  People concerned about this issue may wish to support organizations with a major focus in this area.  These include Americans for Less Secrecy, More Democracy, the Project On Government Oversight (POGO), the Federation of American Scientists, especially their Project on Government Secrecy, the National Security Archive, the Electronic Frontier Foundation, and other organizations with similar agendas including some cited above. A campaign active in the fall of 2014 is to secure the passage of S. 2520, the FOIA Improvement Act of 2014, introduced by Senators Patrick Leahy (D-VIT) and John Cornyn (R-TX).  It is supported by over 50 organizations including the ones just named, led especially Americans for Less Secrecy, More Democracy and POGO].