Danger! Media at Work
A post on Saturday mused on the difficulty of combating the simplistic memes of the Free Culture Movement. The theme is continued today, this time by examining the simplistic memes that characterize conventional news media — with a bit on the Congress tossed in for good measure.
The Washington Post has a feature called Story Lab, which is “where readers and reporters will come together to create and shape stories.” The lead-off example it uses is “this pioneering effort by a radio station that asked its audience to go out and check the price of milk at their local groceries–a story that demonstrated that people in poor areas are more likely to face price-gouging than their affluent neighbors.”
The Post is parroting the radio station’s take on the price differences, which were plotted on a site named the “gouge map.” Looking at it, damned if I can see any consistent geographic pattern, but perhaps a New Yorker would.
But the interesting thing is the Post writer’s assumption, so automatic that no explanation is called for, that any price differences are due to “gouging.” I can think of many reasons why stores in poor areas might charge more for milk – they are less likely to be high volume, so they must charge more per item to pay the overhead; they pay higher delivery charges because of the surrounding density; they lack storage space and cannot buy in bulk; because they have lower throughput they must have more frequent deliveries; they incur higher theft losses, higher insurance costs, and higher personnel costs; they stay open late and charge for being there at 2:00 a.m., and so on.
Indeed, the price differences actually benefit the public because someone who wants to buy milk can find it close by and at any hour; force every store to charge the lowest supermarket price and people will pay in the coin of inconvenience. Seven-Eleven and CostCo have different approaches, and no sensible person things he is gouged by a price difference.
We free market types have a difficult time getting through to “journalists” who approach complicated economic issues in the spirit of Story Lab’s “gouging” assumptions, The results are worsened by the fact that there is a propagandistic subtext, which is to convince the paper’s readers that they are being abused, cheated, gouged by something that is actually a beneficent result of the free market at work. And the milk example is simple, compared with issues of telecommunications, intellectual property, and other tech world subjects. We need a freshly trained journalistic priesthood.
Perhaps this anti-market mindset is like the flu, and the journalists catch it by hanging out on Capitol Hill. Last week, JPMorgan Chase economist James Glassman wrote:
The [financial] reform hearings exposed an unnerving ignorance of fundamental principles of market economics by folks who have a hand in remapping rules of finance that will be with us for a while. Flip assertions about what is and is not socially valuable reflect a confusion about our market economy that is . . . fundamental . . .
The low level of economic literacy is plaguing financial reform. Reform is dangerous—it produces unintended consequences—if we don’t understand the connection between incentives and economic behavior . . . . it’s time for the grownups to step in.
In keeping with the Washington tradition that a serious gaffe occurs when someone actually tells the truth, Glassman was savaged by a HuffPo writer who knows even less than the congress; disowned by the bank, which pulled the column (but the Internet never forgets); and pushed into the manly grovel.
There is hope, though. The newspapers are not doing well financially, and politicians are feeling the heat, too. A recent analysis of the European crisis finds cause for optimism, albeit cautious, in “the fact that the markets are simply no longer letting politicians send good money after bad. In essence, the markets are calling time on the disastrous experiment of the Euro and this should lead to a structurally more efficient allocation of capital across the Old Continent.”
And that is the great thing about markets — in the end, both illusions and delusions get marked to reality.