How Journalists Grease the Skids for Worthless Corporate Handouts
PLUS: California sets the standard on regulating algorithmic price collusion.
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There are many subtle (and often not-so-subtle) ways in which local journalism greases the skids for the endless continuation of pro-corporate economic development policies. To wit, last week, I opened one of the local, D.C. newsletters to which I subscribe — this one produced by the news organization Axios — and was greeted with this headline: “D.C. is in its pro-business era.”
Further down, that characterization was explained:
What’s that mean for a liberal city government? A throwback to a business-friendly era, with the $3.7 billion RFK Stadium redevelopment, a revival of old ideas like sweeteners for tech startups, and new bets like legalizing poker and blackjack games.
I don’t think journalism is the be-all, end-all of local economic policy debates, particularly in an age of fragmented professional media and endless social media slop. But local journalists do move public opinion, and perhaps more importantly, what they say is used by political actors to advance certain ideas and block others. I also think the average voter, when they read the phrase “pro-business” thinks “good for the economy.”
So by framing these policy proposals as “pro-business,” their proponents get a leg up, and those who oppose them are inherently “anti-business” — even when there’s no evidence, as is the case here, that the “pro-business” side’s proposals would do anything worthwhile for the local economy, and plenty of evidence that they would, in fact, be counterproductive for local businesses.
In short, it’s a real problem for our economic policy discourse that throwing a bunch of money at corporations and billionaires is immediately and uncritically labeled as “pro-business” in the press.
I don’t want to dwell too long on the specifics — because my argument is not that the individual piece above is going to move the needle all by itself, but that it reflects an ethos in journalism that is harmful, overall — but I do think it’s worth taking a couple of sentences to point out that the supposedly “pro-business” agenda outlined above is nothing of the sort.
All three of the policies described are empirically-proven failures: Stadium subsidies do not improve local economies, according to the vast bulk of the independent evidence; subsidies for tech startups failed already in D.C. once before; expanded gambling options, research shows, actually decrease local revenue and come with a host of negative knock-on effects caused by gambling addiction.
How’s that for “pro-business”?
I’ve complained before about journalists cheering specific corporate subsidy deals, based on press releases and glowing pronouncements from the involved parties, hyping what turned out to be expensive failures, and thereby providing political capital to politicians who expend public resources poorly.
That dynamic is even worse when applied in the aggregate, when a collection of policies — a political mindset even — that drives more public funds into private hands is treated as common-sense and “pro-business” — again, setting the opposition up, implicitly, as “anti-business.”
Yes, policy choices such as expanding gambling and building new sports facilities will benefit the specific businesses of a few, select business people. The owners of the NFL’s Washington Commanders will get richer thanks to the public spending on their new stadium and surrounding district, while those who set up newly-legal gambling operations will likely (but not definitely!) turn a profit.
But the overall economy won’t be helped should these measures come to pass, and (this is important!) these policies also create losers in the business world. After all, the pesky evidence I linked to above shows that new sports facilities and new gambling operations don’t create new economic activity, they merely pilfer it from surrounding businesses.
People don’t spend more when presented with those options, they just spend differently, so the NFL team and casino owner profit at the expense of the local restauranteur, the concert venue owner, the movie theater operator, etc. And not enough new visitors are drawn in who wouldn’t have come anyway to meaningfully make a difference in a major metro area.
Applied to a host of sweetheart giveaways across government, this standard of calling anything that benefits a specific corporation “pro-business” can cause substantial harm. So why does it happen?
Part of the problem, as I’ve explained before, is that policymakers have allowed Big Tech to destroy the journalism industry, and the husk that is left, particularly at the local level, is made up of a few, low-paid, mostly very young staffers who are writing too many words in too little time. They reprint press releases and regurgitate lame talking points because that’s the only way to get enough pixels up on the web every day, in order to keep their paymasters happy and the clicks coming in.
Another issue is that, too often, the interests of large corporations are able to stand in for businesses writ large, simply because they have the most sophisticated communications operations. Trade associations and lobbying groups such as the U.S. Chamber of Commerce or the Business Roundtable — which represent the views of the largest, publicly-traded corporations that pay the largest dues, even if they nominally have small business membership as well — get to speak for the entire business community, even if their preferred policies are harmful to local businesses and entrench the dominance of large, multinational players.
Finally, there’s simply a conventional wisdom, if you will, that allows ostensibly neutral journalists to label some things as good for the economy and implicitly advocate for them, or blindly accept certain explanations for economic phenomena, because they sound or feel right. For instance, economist Hal Singer had a good piece this week looking at how journalists at the New York Times regularly attribute rising prices to consumer behavior, when other explanations, such as corporate collusion, better fit the fact pattern.
Economic development policy, in my experience, is one of those areas where the problem is the worst, with various boondoggles and wasteful subsidy programs simply assumed to be good, and covered as such.
I realize this may sound like an oversized gripe in an era in which the federal government is deploying regulator goons to make threats against television networks, and in which big media mergers are potentially going to render the very idea of locally-focused news organizations — particularly on TV — a quant relic of a bygone era. But it’s still important to understand how local media shape the economic landscape and make certain things more or less likely, based purely on the way they frame up what should be very controversial policy choices.
UPDATE: Regular readers know that I’ve been covering the use of algorithmic price-setting tools that allow landlords to cloud on rental housing rates. California this week took a big step to crack down not only on that practice, but on the facilitation of algorithmic price collusion economy-wide when Gov. Gavin Newsom signed AB 325 into law. The new law bans the use of coercive pricing tools and makes it easier to bring price-fixing cases against corporations that share common pricing algorithms.
SIMPLY STATED: Here are links to a few stories that caught my eye this week.
Legislators in more than 20 states this year proposed restrictions on investor purchases of single-family homes. (Background on this issue here.)
17 states have enacted 27 laws this year to regulate the use of artificial intelligence in health care.
“Memphis is the front line of [Elon] Musk’s costly foray into the AI wars.”
Minnesota utility regulators approved the sale of the parent company of Minnesota Power to the investment firm BlackRock, over the objections of an administrative law judge and the state attorney general.
Building trade unions are launching a “full court press” in Nevada to push for TV/film production subsidies. (Read background here on why those programs are a massive waste.)
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— Pat Garofalo