In the latest installment of the Big Think's "What Went Wrong" series, Chrystia Freeland, the Financial Times' U.S. Managing Editor addresses whether better business journalism could have prevented the crisis. She doesn't think so. She says nothing could have prevented the crisis. That may be true, but I believe it could definitely have helped matters. And she appears to agree that business journalists could have been better by being more eager to tackle complex problems, questioning the consensus point of view, and not getting as caught up in market optimism. I agree and think it's worth expanding on these points.
Business Knowledge And Understanding
Part of the reason I got into business journalism is because I was tired of reading so much terrible, uninformed reporting on finance and economics. So I completely agree that no business reporter can succeed if he or she lacks an ability or willingness to tackle complex problems. Business news, more like any other kind of news, requires a solid understanding of what you're reporting on. You also have to be able to perform analysis, because lots of numbers are involved. If you can't navigate your way through a spreadsheet, then you're going to have trouble effectively covering business and finance.
That doesn't mean you need to have worked in the market before becoming a business journalist, though it might help. It is possible to develop the knowledge as you go. A perfect example would be the New York Times' Andrew Ross Sorkin, who I consider to be a top-notch finance reporter. In another interview posted this week as part of the Big Think Project, he notes separately one of the reasons why he has had so much success covering Wall Street:
I've tried to study the industry. I've spent enormous amounts of time. I can, unfortunately, do a model, a DCF model, with the best of them. I wouldn't say I enjoy it, but -- and I also think that when you've studied it up, when you've come to the table with the right questions, when it's clear to the other side, the interviewee, that you know what you're talking about, you can get a lot more.
Consensus, Optimism and Wackos
Then, there's consensus and optimism. I think these points really mesh together, and I'll explain why in what follows.
I've noticed the vast, vast majority of business news coverage can be grouped neatly into two categories: arguments for the consensus and arguments by wackos. There's very, very little voice given to those who wish to thoughtfully challenge the prevailing views in the market. Why is this?
First, I have noticed a sort of strange difference between business news and other news. When it comes to general news, lots of people complain that journalists only focus on the bad news, while rarely doing stories on good news. That's because good news doesn't get eyeballs. Which headline's story do you think more people will read: "Local Man Named Teacher Of The Year" or "Local Man Murders Entire Family"?
But with business news, it's sort of the opposite. The business community likes reporting that accentuates the positive. It's almost as though many of those in business like their news to make them feel better. Maybe they want their egos stroked to believe their stock portfolios are safe. Most of this community wants the news they consume to reflect market optimism.
And that makes sense, because business news can affect the market. In the rare event that legitimate business news hits with a negative view of a company, then people can lose money. Since far more market participants are long stocks, instead of short, pessimism can actually cause tangible harm. That's why the consensus -- which tends to be optimistic -- is a touchy thing to buck for some news outlets.
Of course, there are news reports that do disregard the consensus views. But they're most often the wackos. These are the nut jobs calling for Zimbabwean inflation in 2010. They're the crazies worrying about the U.S. defaulting in the next two years. Business viewers don't find these guys harmful, however, because few take them seriously. Sure, there's a handful of people who might heed these wacky warnings, but most of the business community finds them an amusing diversion and feels they pose little risk to the general consensus. News outlets love them too, because they're generally amusing guests to watch or hear from. As reality TV's success has proven: people love watching crazy.
Does that mean that business journalists can't question the consensus views in a thoughtful manner? Not exactly, but it does mean that there's a risk in doing so. Some media outlets would be okay with that; others might not. While investigative reporting that reveals the facts, whether positive or negative, is desirable from a journalistic perspective, the reality is that media needs readers to pay the bills. Those goals don't always coincide.
But I have always lived by some advice given by Mark Twain in one of my favorite quotes of his, and think business journalists should too:
Whenever you find yourself on the side of the majority, it is time to pause and reflect.
I believe one of the most important things that a business journalist can do is look at the prevailing views in an economy and question them. Anyone who wants to learn something from reading what you write doesn't need to hear what they already know and believe -- they need to learn something new. If you turn up some data or logic that goes against a commonly held market view, then that could be incredibly useful. If business reporters really embraced this philosophy, then perhaps business readers would realize the value that could be derived by good journalism.