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News Media and the Financial Crisis
How Elite Journalism Undermined the Case for a Paradigm Shift
Adam Cox
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eBook - ePub
News Media and the Financial Crisis
How Elite Journalism Undermined the Case for a Paradigm Shift
Adam Cox
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About This Book
This book explores how leading news media responded to the 2008 financial crisis and its aftermath, showing how journalists regularly framed discussions about post-crisis regulatory reform in ways that reinforced the same market liberal policy paradigm that had ushered in the crisis.
Drawing on an analysis of nearly three years of news coverage and on interviews with journalists who covered the financial crash for major media groups, Adam Cox demonstrates how this framing of issues, often focusing on the costs of tighter regulation rather than the preventive benefits, formed the basis of a post-crisis narrative in the United States that undermined the role of the state, despite the wreckage that had just occurred. He looks at how state actors, think tanks and the financial industry worked in concert to encourage such a narrative, ultimately lending support to a market liberal worldview that was being seriously challenged for the first time in decades. While highlighting journalists' ability to resist agenda-building efforts by powerful actors, this book offers a methodology for considering media narratives based on quantitative analysis of framing patterns.
News Media and the Financial Crisis is aimed at students and researchers working at the intersection of communications, journalism, political economy and public policy.
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1 Putting post-crisis journalism into perspective
DOI: 10.4324/9781003177944-1
For millions of people, the 2008 financial crisis was not just a time of hardship and loss. It was also an eye-opening moment. It showed that something as obscure as financial regulation could have an enormous and direct impact on people's lives. It demonstrated that markets could be capricious and dangerous, despite conventional wisdom which for years had portrayed them as fair and reliable. The suddenness and severity of the crisis suggested that the institutions meant to protect the financial system had been negligent, captured or both. The prospect briefly loomed of a paradigm shift towards a more interventionist regulatory policy approach.
Relying on the state to set stricter guardrails, however, means relying on expertise. As much as the crisis had opened peoplesâ eyes to the unpredictable nature of markets, it also sowed doubts about depending on âexperts.â These were the same people, the thinking went, who had got the world into such a mess. They also had not sounded the alarm. âOnce the crisis had happened, not many people were willing to listen to what academics had to say, especially economists, since I think the economics profession was sort of caught up in it for failure to warn everybody,â Robert Litan, a senior fellow at Brookings Institution, told me. âWho's going to listen to us?â1 Litan believed the crisis represented the start of a society-wide distrust of expertise.
It was not just the banking industry, the academic community and the state that apparently had failed society. So too had the press. The crisis prompted fresh scrutiny about its ability to perform its traditional watchdog role. Why had journalists not seen or reported on the myriad financial problems that were mounting? The pre-crisis coverage was, by many accounts, an epic miss. Perhaps more importantly, what lessons did journalists take on board afterwards? This book explores that last question. Focusing specifically on elite news media behaviour, it examines the coverage of post-crisis regulatory reform in the United States. By elite media (Chomsky 1997; Golan 2006), I mean national or international news providers that have what Guy Golan has called an inter-media agenda-setting function, meaning their editorial choices set the pace for other media.
The book offers a framework for viewing regulatory news coverage, based on different ways that journalists, and the sources they used, framed the subject of market oversight. Often this meant focusing on the costs of regulation rather than any preventive benefits. The narratives that emerged in the initial post-crisis years lent support to a market liberal worldview just when it needed it most â as it was being seriously challenged for the first time in decades.
Watchdogs and paradigms
Since its beginnings roughly a century ago, the field of journalism studies has questioned the performance of the press in its role as a watchdog for society. To begin with, there is the matter of who, or what, the press is watching out for. As James Curran wrote: âThe principal democratic role of the media, according to traditional liberal theory, is to act as a check on the state. The media should monitor the full range of state activity, and fearlessly expose abuses of official authorityâ (Curran 2002, p. 217). Yet this prompts a question as to what happens when the state shrinks its role and outsources work to other institutions. In the United States and Britain, for example, the loudest political drumbeat since the 1970s had called for a reduced state role. Should the watchdog role therefore encompass what the state leaves to the private sector? A wider role definition â given neoliberalism's emphasis on private-sector solutions to public problems â calls on the press to monitor both public and private sector spheres. Curran alludes to this, writing that the traditional view âfails to take account of the exercise of economic power by shareholders and managersâ (2002, p. 219).
As the range of activities requiring monitoring widens, so too do the external pressures brought to bear on the press. One telling statistic comes from Robert McChesney and John Nichols (2010), who cited data showing that at the time of their writing there were four public relations practitioners for every working journalist in the United States. That compared with ratios of about two-to-one in 1990 and 0.75-to-one in 1960.2 The growth of the PR industry is one of many forces that can influence press behaviour. There may be oblique displays of power through media ownership or commercial pressures, or sociological factors such as the level of workplace diversity or the degree of interdependency in journalist-source relations.
Numerous studies have considered these dynamics and suggested journalists may not be as independent as they like to think. This critical tradition examines the ways hegemonic forces can extend to media production and compromise the notion of a free press. One of the best-known examples is the propaganda model by Edward Herman and Noam Chomsky (1988); it contends that such forces set the parameters for what is considered fit to print. But John Corner (2003) also noted that the ideas underlying this model had ample precedent. He argued that much of European media enquiry since the 1960s has focused on questions of state and market dynamics and how they influenced journalism.
One could choose from a wide variety of pressing issues or significant events â from electoral politics to corporate malfeasance â to consider the scope for news media to act as an independent check on powerful interests. At a time when the press is focused on threats to democracy, climate change and public health crises, financial regulation is, to put it bluntly, hardly headline news. But a dozen years ago it was. And the news coverage of that period â which marked the most severe economic dislocation since the Great Depression â says much about the ability of elite news media to perform a watchdog role when the subject matter is complicated and ideologically charged.
The crisis prompted a raft of studies arguing news media had failed in their watchdog duties in the run-up to 2008. Multiple scholars characterised journalists as âcheerleadersâ for the financial sector (Fraser 2009; Marron et al. 2010; Mohamed 2009; Stiglitz 2014). Matthew Fraser said this posture was one of the reasons journalists developed a condition he called âcrash blindness.â Maria Marron, Zeny Sarabia-Panol, Marianne Sison, Sandhya Rao and Ray Niekamp said the cheerleader label applied to generalists and business journalists alike. One longitudinal study, by Sophie Knowles, Gail Phillips and Johan Lidberg (2017), showed how news media appeared to abandon their watchdog role repeatedly during market booms. In analysing a recession in the early 1990s, the dot-com bubble and the 2008 crisis, the authors found a pattern of decreasing levels of forewarning and coverage regarding topics that were germane to the ensuring financial upheaval.
Some studies were focused inward, such as those which looked at newsroom skills and knowledge. Others were focused outward, such as those which considered journalist-source relations or commercial pressures. But before asking how and why journalists may have fallen short, there is the question as to whether those who cover finance even subscribe to a watchdog role. Damian Tambini interviewed journalists and discovered âconsiderable dispute regarding what constitutes responsible business and financial journalismâ (Tambini 2008, p. 8). Some saw themselves as having a mainly commercial role in terms of selling newspapers, others showed an awareness of the social function of financial journalism, and still others rejected the label of journalist altogether.
Nikki Usher (2013) suggested the question was not whether, but which â as in which version of a watchdog role journalists saw for themselves. Reporters at the New York Times, Usher noted, felt they had fulfilled their duties by following what she called the transmission model of the watchdog role. This is where journalists believe their job is to serve up information and let audiences decide what to make of it. But Usher also said audiences do not always listen. Chris Roush (2009) had made a similar point when he argued journalists had lived up to the watchdog role but were simply not heeded because audiences had been caught up in the bubble of a bull market. To Usher's critique, I would add that the transmission model may defang the journalist and empower other actors. Journalists could end up offering he-said-she-said journalism (Rosen 2009) or become influenced by external forces, such as those Herman and Chomsky listed in the propaganda model.
Fraser, Francesco Guerrera (2009), Danny Schechter (2009), Paula Chakravartty and Dan Schiller (2010) and Dean Starkman (2014), among others, investigated the reasons why few journalists asked probing questions about mortgage lending, risk-taking and the health of the banking industry. Among the factors they noted were a focus on access over accountability (Schechter 2009; Starkman 2014), and a lack of resourcing by profit-driven private media groups (Chakravartty and Schiller 2010; Schechter 2009). Mike Berry (2012) and Paul Manning (2013) focused on which sources news media gravitated towards, with the former noting a reliance during the crisis on private-sector economists at the expense of other voices, and the latter examining ways that mutually shared understandings discouraged journalists from being more critical. Another factor: journalists often did not possess the specialist knowledge needed to overcome the obfuscating effects of technical jargon (Fraser 2009). As Guerrera, who covered the crisis for the Financial Times, wrote: âWe were lied to. We were not good enough or resourceful enough to see through the liesâ (Guerrera 2009, p. 48).
But the question I am most interested in is less procedural and more ideological. Or rather, it is procedural in so far as ideology affects procedure. I wish to examine the paradigmatic assumptions that journalists and their sources made after the crisis. If journalists had been cheerleaders, a vital question is not just why they cheered, but whether they continued cheering afterwards. This book looks at a landmark U.S. law and how articles framed discussion in ways that embraced or rejected competing regulatory paradigms. It explores the degree to which elite journalists offered platforms for market liberal viewpoints and marginalised arguments favouring a paradigm shift. Ultimately, it aims to offer lessons applicable to news media more broadly in a post-pandemic era.
The procedural-ideological connection runs through the literature. Anya Schiffrin (2015) highlighted it when she pointed to research that showed how reliance on certain sources resulted in coverage that reflected neoliberal thinking. Keith Butterick (2015) argued that journalists had acted as cheerleaders for decades, as a growing PR industry and competitive pressures encouraged a passive posture that served corporate interests. Laura Basu (2018) showed how the financial crisis was repeatedly reframed in Britain to legitimise the policies that had led to the crisis.
What has been rarer, however, are quantitative studies on post-crisis media discourse according to ideological or paradigmatic orientation. Jesper StrömbÀck, Toril Aalberg and Anders Jenssen (2010) did a comparative analysis of media behaviour and public attitudes about regulation in six countries in late 2008 and early 2009. That period, however, was while the crisis was still raging, and major regulatory initiatives had yet to take shape. It noted a tradition of hostility towards interventionism in the United States but did not see signs of that in either the content or public attitudes at that point. Thomas Bach, Mathias Weber and Oliver Quiring (2013) looked at framing in the German press, with several frame categories that had ideological dimensions (a self-regulation frame, a globalisation frame, etc.). But their study also focused on late 2008. Apart from that, there have been a handful of studies that offered quantitative framing analysis of post-crisis discourse in smaller countries such as Ireland (Cawley 2012), the Netherlands (Damstra and Vliegenthart 2018), Norway (Bjerke and Fonn 2015) and Sweden (Falasca 2014). A common theme in these works is the resilience of neoliberal ideas despite the crisis.
Having discussed literature on news media's watchdog role and their coverage of finance, the rest of this chapter provides context for the case studies that follow. The next section considers the relationship between a policy paradigm and ideology. I then trace the evolution of policy paradigms since the start of the 20th century. That brings us to the paradigmatic crossroads that journalists â and all of society â faced after 2008. Here, I discuss the Obama administration's response and public attitudes about regulation. This sets the scene for case studies of the narratives that emerged from the wreckage of 2008.
The grip of a policy paradigm
In âEight Days,â a fly-on-the-wall account in The New Yorker of efforts to save the investment bank Lehman Brothers in September 2008, James B. Stewart illustr...