Thursday, January 1, 2009

Government Aid For Detroit? OK… But NEWSPAPERS ?!

Internet technology has dealt a serious blow to newspapers and magazines. The political bias of the media has also led to a lessening of their influence and profits. Out of Connecticut is an ominous development. Now the Connecticut state government is thinking about bailing out ailing newspapers.

Reuters reports on this disturbing development as follows.

.”..The Bristol Press, may fold within days, along with The Herald in nearby New Britain.

That is because publisher Journal Register, in danger of being crushed under hundreds of millions of dollars of debt, says it cannot afford to keep them open anymore.

Nicastro and fellow legislators want the papers to survive, and petitioned the state government to do something about it. “The media is a vitally important part of America,” he said, particularly local papers that cover news ignored by big papers and television and radio stations.”

Imagine what would happen if this bailout were ever passed. A whole legislative district has a newspaper that owed its existence to appropriations by the legislature. Would this not serve as a powerful incentive not to report certain types of stories? This would feed into the very distrust that has contributed to the demise of papers. I know of two newspapers that are saved from oblivion with an annual fund raising drive. That raises far less questions than actual government financing.

The government can create or disrupt the climate in which business is made. Taxes can be adjusted to encourage risk taking by investors. But the media is a watchdog. Subsidizing them is like a burglar tossing the family dog a meatball with a sleeping pill in the middle. You have to wonder about motives.

The wrong kind of government help can discourage needed innovation. Our automobile industry needs to be gently prodded into improving its products. I went to a family reunion where the subject of fuel efficient cars came up. One friend of mine said it best.

“I want to buy a fuel saving car to save money on gas. But they are so much more expensive than regular cars. I would never recoup my investment.”

That is the general verdict, for instance about Smart Car. It has a catchy look. It saves money on gas but it’s way too expensive. It would take forever to recoup your losses. Perhaps the right tax breaks could make it cost efficient to offer fuel efficient cars at reasonable prices.

The government holds a lot of cards in the game of economic recovery. Ronald Reagan actually recognized this. He was very successful in getting the government to stop killing business with punitive taxes.

It is good for government to send a clear signal that it cares about the financial health of corporate and individual taxpayers. This is plain pragmatism.

I am, however worried about left wing ideologues constantly expanding the role of government. I am also worried about the advocates of pure sink or swim capitalism. I distrust anyone whose primary goal seems to be making their philosophy or system work.

People should be the focus. Entrepreneurs should be rewarded and not punished for risking everything to make a business work. And workers should be paid a living wage. Workers should view the welfare of their boss as the source ordained for their financial well being. And a boss should recognize that workers are essential to making his dreams come true. The adversarial model of labor relations is the bane of our economic and political system. It is part of the lingering whiff of Marxist class warfare that pervades our thinking. We need to replace this injurious approach with a way of doing business that reflects our common interests and our common humanity.

The idea of bailing out a newspaper is troubling even to those who work in that troubled industry. Creating a favorable tax climate for newspapers is one thing. Writing them a check is another matter entirely. Even without the special problems peculiar to the news industry, there are pitfalls to throwing money at ailing businesses. Subsidies to an ailing industry should be a last resort to facilitate long term corrections and improvements in an ailing industry.

The expression “smart money” is very instructive. Money is a tool. It can not build a business any more than pieces of wood can build a house. Wood, hammers and nails all need human intelligence to assemble them into useful configurations. This is equally true for money.

The plight of Connecticut’s local papers drives home an important truth. We need to look not only at our troubled economy but also our flawed thinking.


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