The American Media Crisis--The One Who Pays Is You

The media's monotonous support for the Obama campaign ratchets my curiosity about its declining standards. Yellow journalism and bias go back to the Federalist period of American history and before, and Jefferson was not above planting friendly journalists in positions in order to maximally irritate his opponents. But there are several differences between the factionalism of today's media and that of only a few decades ago. In the 1960s, there was still a significant degree of variability in the opinions of the major New York newspapers. Today, television and newspaper outlets conform to a social democratic norm and are increasingly shrill.

Conservatives believe that there is a liberal bias in the media and this is in part true. The corporate and financial interests that control the television and newspaper outlets are corporatist and social democratic because social democracy supports their financial interests. Thus, to understand the reason for the media's liberal bias, it is necessary to fathom the corporate interests that control the major media outlets and the economic conditions that favor their health.

Social democracy has always been a method by which corporate power deceives and controls a naive public. The history of the Progressives and the New Deal as ensuing from the exercise of a broadened interpretation of corporate power, that is for instance, as opposed to small business power, is well documented. The increased stridency of the mass media not only in support of Barack Obama but in its shrill uniformity (examples are MSNBC's Chris Matthews and CNN's Jack Cafferty and Lou Dobbs) suggest a crisis of confidence on the part of American elites. The crisis is economic and it is in its early stages.

The Bush administration has intensified the inflation of the past 25 years to a point that will necessitate a recession. But American financial and business institutions have been considerably weakened due to mismanagement and may not withstand a recession. The media's advertisers and corporate owners are in for a rough ride.

Wealth has been reallocated away from the economy's productive sectors such as manufacturing and agriculture, and the manufacturing firms as in the automobile industry that might be able to produce value are frequently not globally competitive. For them to become competitive the dollar needs to depreciate to the point where their exports become so. This will attract talent back to productive areas of the economy but will reduce the wealth base and force many Americans to reduce their living standards. As well, the reduction in the purchasing power of the dollar will be associated with an influx of dollars from abroad, causing additional price inflation here. This will cause instability. The reason for the price inflation is of course Federal Reserve policy that has subsidized the same firms that advertise through the mass media and include the mass media firms themselves.

In response to the depreciating dollar the Fed will need to raise interest rates. This will cause difficulties and perhaps bankruptcy of major American firms.

The mass media adopts an increasingly lock step tone in order to prepare for a series of economic crises whose causes it aims to distort. The beneficiaries of the long inflation of the past 25 years have been top managers, Wall Street and hedge funds. Oil speculation is not really an important component of this, and the media's recent tap dance about oil speculation is evidence of how it will continue to lie about the economic problems in the next decade. Barack Obama has received more donations from Wall Street and the financial community than has John McCain. He will avoid, with media support, addressing the underlying sources of the need for adjustment.

The one who pays is you.

My Neighbor and American Ingenuity

My neighbor had his sister's pressure washer for a few weeks. I hired him to do our front chimney at our house in West Shokan. The chimney hadn't been cleaned since Clayton's uncle built it in the 1950s. My neighbor is very talented. There is still some old fashioned American inegenuity left:

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William Graham Sumner on 19th Century Corporate Fraud and Government Subsidies to Business

The Progressive movement that developed in the 1890s into one of the most important political movements of the twentieth century was in large part a reaction to the development of big business and the trusts of the late nineteenth century. Theodore Roosevelt, a Republican as were the vast majority of Progressives, ultimately believed that nationalization or at least federal licensure of big business firms was necessary to ensure that trusts remained good and reasonable.

But did the very existence of trusts depend at least in part on government subsidies in the first place? This is what William Graham Sumner wrote in 1883 about corporate fraud and government subsidies to business:

"I have said something disparagingly in a previous chapter about the popular rage against combined capital, corporations, corners, selling futures, etc., etc. The popular rage is not without reason, but it is sadly misdirected and the real things which deserve attack are thriving all the time. The greatest social evil with which we have to contend is jobbery. Whatever there is in legislative charters, watering stocks, etc., etc., which is objectionable, comes under the head of jobbery. Jobbery is any scheme which aims to gain, not by the legitimate fruits of industry and enterprise, but by extorting from somebody a part of his product under guise of some pretended industrial undertaking. Of course, it is only a modification when the undertaking in question has some legitimate character, but the occasion is used to graft upon it devices for obtaining what has not been earned. Jobbery is the vice of plutocracy, and it is the especial form under which plutocracy corrupts a democratic and republican form of government. The United States is deeply afflicted with it, and the problem of civil liberty here is to conquer it. It affects everything which we really need to have done to such an extent that we have to do without public objects which we need through fear of jobbery. Our public buildings are jobs--not always, but often. They are not needed, or are costly beyond all necessity or even decent luxury. Internal improvements are jobs. They are not made because they are needed to meet needs which have been experienced. They are made to serve private ends, often incidentally the political interests of the persons who vote the appropriations. Pensions have become jobs...The California gold-miners have washed out gold, and have washed the dirt down into the rivers and on the farms below. They want the Federal Government to now clean out the rivers and restore the farms. The silver-miners found their product declining in value, and they got the Federal Government to go into the market and buy what the public did not want in order to sustain (as they hoped) the price of silver. The Federal Government is called upon to buy or hire unsalable ships, to build canals which will not pay, to furnish capital for all sorts of experiments, and to provide capital for enterprises of which private individuals will win profits. All this is called 'developing our resources' but it is, in truth, the great plan of all living on each other.

"The greatest job of all is a protective tariff. It includes the biggest log-rolling and the widest corruption of economic and political ideas...The farmers have long paid tribute to the manufacturers; now the manufacturing and other laborers are to pay tribute to the farmers. The system is made more comprehensive and complete, and we all are living on each other more and more...

"...Attention is all absorbed by the clamorous interests, the importunate petitioners, the plausible schemers, the pitiless bores. Now who is the victim? He is the Forgotten Man...."

Social Democratic Fallacies

Social democracy, which has at various times inappropriately been called liberalism and progressivism, is a doctrine that has created problems in the name of problem solving. Among the first to recognize the pattern of social democracy's multiplying and intensifying problems was William Graham Sumner in his essay "What Social Classes Owe to Each Other", first published in 1883. Toward the end of this small book, Sumner describes the "forgotten man", not the poor man who is the beneficiary of proposed regulation, but the third party whom the reformer aims to coerce and who will pay an escalating price for the reformer's fallacious schemes.

Since Sumner wrote the essay, we have seen urban renewal programs supposedly aimed to help the poor that drove jobs and housing from cities, resulting in homelessness and escalating real estate values that destroyed the possibility of urban life for all but the wealthy. We have seen welfare programs that have institutionalized poverty. We have seen massive subsidies to failed corporations that encourage a culture of incompetence and waste in a business community that is already self indulgent. We have seen a housing code in New York City whose aim is to further inflate construction costs. We have seen housing prices rise, and when they declined slightly, a declaration of a "crisis" because bankers, whose job it is to lend intelligently, could not be bothered to screen borrowers. We have seen earmarks and bridges to nowhere. We have seen billions squandered in cancer research that has been politicized to the point where Fortune Magazine asserts that cures have been staunched by senior academic researchers who feel threatened by new theories. We have seen high schools graduate seniors who can barely read, and universities graduate semi-literate college seniors under failed, progressive education theories. We have seen one social democratic blunder after the next, and as Sumner put it, the forgotten man or woman is the one who pays.

What is this social democratic doctrine to which our nation has found itself committed? Social democratic and progressive ideologies dominate both the Republican and Democratic Parties, yet the assumptions that their advocates make deviate from the core beliefs of most Americans, core beliefs that are pragmatic and liberal in the Lockean sense. Social democracy is neither pragmatic nor liberal, yet it uses the terminology of pragmatism and Lockean liberalism to cloak fallacious underlying assumptions:

1. The fallacy of scale. Social democracy argues that bigger is better and that progress involves progressive governmentalization on ever larger scale. Since the 1950s and before, most economic progress has not required large scale, and economies of scale have not been fundamental to new economic and technological advance. Yet, social democracy subsidizes scale through financing mechanisms like the Federal Reserve Bank, political favoritism, direct grants and regulatory systems that freeze out small business.

2. The eschatological fallacy. Social democracy believes that society is headed toward a specific end or purpose related to its model of large scale production, namely enhancement of government control or socialism. The belief that the "problem of production has been solved" characterized the modernist period--until the Japanese showed American firms that they were clueless about production problems and that there will always be improvement in production. Moreover, the solutions to the problems of production require information, not scale. As well, large scale organizations are too rigid to adopt the steps needed to improve production.

3. The predictability fallacy. Social democracy believes that it can solve problems because rationality is the primary ingredient to problem solving. In fact, rationality is but one of several elements in problem solving. Because demand, technology and other conditions change, information specific to time and place is often more important to solving technological and market problems, as the Austrian economist Friedrich A. Hayek argued. Therefore, experts in large governmental bureaus are not only ill-equipped to solve problems, but are guaranteed to fail to grasp what the important problems are.

4. The infinite regress fallacy. Social democrats believe that if business is corrupt, all that is needed to correct corruption is a layer of regulation. But who is to guarantee that the regulators are less corrupt than the firm? Are regulators descended from a special race of especially honest men? Might not regulators develop economic interests in the industries that they regulate? And if so, do social democrats propose regulators of the regulators, and do they believe that this additional layer, or Congress itself, is somehow better equipped or motivated to regulate?

5. The social democratic invincibility fallacy. Social democrats imagine themselves, as Sumner points out, to be smarter, more moral and better equipped to solve problems than others. Few social democrats have solved problems competently. I can state this with assurance because few government programs work. The groupthink associated with participation in the social democratic movement is the social democratic movement's greatest obstacle to pragmatism. The readers of the New York Times imagine themselves "smarter" because they read the Times, and so on. This sort of egotistical delusion precludes intelligent thinking and guarantees a rigidity and closed mindedness among social democrats that ensures the failure of any and all of their ideas.