‘Twenty Ways to Bulk Up Your Cash’. That was the breathless headline in The Australian Financial Review on September, 27, 2005
“It’s shop till you drop for ordinary people with money to park,” the article gushed. “And the range of investment options is so vast, it’s very nearly an embarrassment of riches.”
The most interesting trend, we were told, were nifty new high-yielding fixed income products called ‘collateralised debt obligations’ that had previously been exclusive to the big end of town but which were now available to retirees seeking higher yields to supplement their pensions.
But wait, there was more. Retirees worried about losing their dosh could buy capital protection by sinking their life savings into Asian hedge funds. Hubba Hubba!
Well, we know how that story ended. Those funky little securities – dubbed by Warren Buffet as weapons of mass wealth destruction – wormed their way into the global credit system and nearly blew it up, taking the savings of tens of millions of retirees and hard-working people with them.
Now, the causes of the GFC are complex and blame can safely be spread around reckless bankers, incompetent regulators, ratings agencies, rocket scientists and economists. But the financial press, supposedly a watchdog of the public interest against the shonks, deserves some scrutiny as well.
Is the financial media supposed to be a cheerleader for capital? Is its role primarily to act as a defacto marketing arm for the financial services industry to plug product to the “mums and dads”? Does it exist firstly to promote uncritically the agenda of business lobbies as synonymous with the public interest? It’s worth asking those questions.
Indeed, the role of the financial media has been topical lately after a much read column by Fairfax journalist Paddy Manning who, at the cost of his job, blew the whistle on the erosion of editorial independence at the AFR, the rise of ‘advertorials’ (advertising dressed up as news) and a trend toward faked-up front page ‘exclusives’ that are essentially free PR for business lobbies and investment banks.
“The AFR’s business journalism is built on a fundamental contract between company and reporter: high-level access in exchange for soft coverage,” Manning wrote. “Too often, even for many of its own hard-pressed reporters’ liking, the result is PR-driven ‘churnalism’ which shows up as ‘drops’ …’herograms’ for business leaders, unreadable roundtables and conference-linked spreads featuring plenty of happy snaps of business leaders with a glass of champagne or mineral water in hand.”
Manning is not alone in this criticism. And it is not coming from only one side of politics. Professor Sinclair Davidson, a conservative libertarian and senior fellow at free market think tank the IPA, has condemned creeping PR dressed up as business news and argues the AFR does itself no favours by being an uncritical cheer squad for one group or another.
“It worries me – as an avid consumer of news and opinion – that the media should see its role as selling PR to its readership as opposed to providing a platform for advertising while providing news content,” Davidson wrote in The Conversation. “Consumers should be as well-informed about business and economics as they are about politics. It is here that I think the Australian business media doesn’t serve its customers as well as it could or as well as it should.”
To an extent, the financial press has always erred on the side of being too cosy with business. It’s a professional hazard for journalists generally. Long-term police reporters can end up identifying with policemen to the extent they write like one (‘the offender decamped in a northerly direction’). Political journalists, stuck watching Canberra too long, can start to see the world through the lens of a party tactician and report politics as an end in itself. And financial journalists can start to fancy themselves as investment bankers, economic gurus and business titans, despite having salaries a fraction of those they report on. (Christopher Skase took it a step further and actually became one).
This media version of Stockholm Syndrome results in journalists starting to see their roles (usually without being conscious of it) as unpaid spokespeople for the sections of society they report on. They come to imagine themselves as representatives of the milieu in which they move, their role being to advance uncritically the sacred cow concerns of business lobbies – productivity ‘reform’, lower and lower tax rates, deregulation and privatisation – regardless of whether or not it is good public policy. They mistake ‘pro-business’ for ‘pro-market’.
This isn’t to say that these calls by business should not be reported and that these arguments should not be made through the media. But it seems increasingly clear that many business and financial journalists see no wider public role in their reporting. They are there to advance the cause of business or to help investment banks ramp IPOs or to provide ‘investors’ (speculators) with stock tips or to move the market or simply to sell newspapers. Some aspire to being an Alan Kohler or a Robert Gottliebsen, a guru perceived as having privileged information about the market.
But just as in other branches of journalism, the sense of a Fourth Estate responsibility – of holding the powerful to account and representing the interests of people as citizens (not merely as consumers or investors or shareholders) – is fading or non-existent, at least at an institutional level. This has little to do with individual journalists getting worse, in my view. But it’s more a reflection of the economic pressures on the industry, the real-time nature of financial news that mistakes noise for signal (just as in politics), the growing complexity of finance, the competition from blogs and online tipsheets and the dwindling resources for thorough, fact-filled journalism.
Just after the 2008 financial crisis, London School of Economics professor Damien Tambini published a paper entitled ‘What is Financial Journalism For? Ethics and Responsibility at a time of Crisis and Change’ (PDF), Tambini argued that with the boundary between news, PR, spin and paid advertorial growing ever fainter, it was becoming even more imperative that journalists were consciously aware of and adhered to the supposed ethical responsibilities of their profession.
“Ultimately, do journalists have a broader professional duty to ensure that corporate malpractice comes to light, or is their role merely to provide whatever their readers want?” Tambini asked. “And are those readers basically to be addressed as real or potential investors or as citizens with a variety of views?”
Clearly, the AFR has decided to tailor the newspaper to a single view of the world. That may win them a few friends at the big end of town. But as a former financial journalist who now works in the financial markets, I’ve encountered a breadth of opinions about the economy, tax, industrial relations and climate change that belies the assumed Cycloptic worldview of the Fin’s front page. Long term, that can’t be a good business strategy.
Catering to a single class with a single ideology also ignores the millions of Australians who have a stake in the financial system through their superannuation, their jobs, their mortgages, their taxes, their business and credit card loans and all the risks piled ever higher onto their shoulders by a capitalist structure that so often patronises them as dumb consumers, passive ‘mums and dads’ and suckers to be sold another dud.
Who looks after these people? Who argues their corner, if not financial journalists?