In The Wealth and Poverty of Nations, author David Landes writes: Could media be held legally liable if exaggerated reports of the global economic crisis prove to further decrease consumer confidence and actually worsen the situation? Richard L. Scheff, a national expert on corporate liability and white collar crime issues, warns media that they could potentially be exposed to liability despite apparent constitutional protections. Scheff’s warning comes in response to a poll that found 77% of Americans think the financial press is making the economic crisis worse by projecting fear into people's minds. The majority of those surveyed in a telephone poll conducted in December by Opinion Research Corporation feel that the financial press is “damaging consumer confidence and dampening investment,” making a difficult situation much worse by “focusing on and embellishing negative news.” "Although statements by the media are protected by the First Amendment, the survey results demonstrate that the public believes that the press bears some responsibility for the lack of confidence in the economy," Mr. Scheff, vice chairman and partner with Philadelphia-based law firm Montgomery McCracken Walker & Rhoads, said in a press release. The Great Depression or the Great Media Depression? This dark period in American history was consistently cited by the mainstream media as a point of comparison in 2008, “standing out as the most blatant attempt by the media to portray an economy in chaos,” states the Business & Media Institute (BMI). "The depression trade has come full circle from being a small cottage industry dominated by a handful of permanent pessimists, to a major business where even well-known mainstream financial pundits have jumped on the bandwagon,” writes Clif Droke, editor of the multi-weekly Momentum Strategies Report. Is it surprising then that poll results last year increasingly reported the majority of Americans fearing and worrying about the onset of a severe economic depression? As concluded by BMI, “Americans weren’t just feeling the pain of an economic downturn. They were repeating what they were told in mainstream media.” The Great Media Depression, a report released last month by BMI audited media coverage of the economic crisis of 2008 and compared it to coverage of the Great Depression by major newspapers of that era. What has occurred is a startling difference in sentiment and outlook between media then and media now. First analyzing coverage in The New York Times, Wall Street Journal, and Washington Post the week of the stock market crash in October, 1929; then ABC, CBC and NBC reports the week of the collapse of Bear Stearns in 2008, BMI determined the following: 1) While all three newspapers in 1929 frankly acknowledged the loss as being huge and painful, they all asserted the tone that “business was still sound.” Headlines declared phrases like “Market Orderly,” “Bright Future” and “Fear Waning.” 2) Overall, the three papers took an optimistic view in nearly three-fourths of the front-page financial stories, more than four times as often as they took a negative view. 3) In 2008, TV Coverage was negative to near identical percentages, with 74% of all network stories being negative (86 out of 116). Headlines referred to the unfolding financial situation as the “perfect economic storm,” “bleak” or a “growing economic meltdown.” The Great Depression was far worse than the recession we are currently going through, yet people were far less inundated with negative news stories and media as we are today. And perhaps they were better for it. It’s remarkable to consider that on Nov. 1. 1929 - two days after the infamous crash of Oct. 29, 1929 - The New York Times ran a headline more optimistic than the majority of what we either read or heard in 2008: “Days Market Developments All Encouraging.” How is it that our media is now overwhelmingly more negative during our current challenging, yet certainly not catastrophic, recession? Critics determine journalists in the twenties missed capturing the full story of the market reality, with coverage leading up to and preceding the 1929 stock market crash being overly positive. Yet the BMI report counters that journalists were neither ignoring the problems or “acting irresponsibly” by retaining a tone and spirit of optimism in their coverage. In our times, the report states, journalists have gone too far in the opposite direction and need to retain a sense of balance between positive and negative news reporting. “Somewhere between the two lies appropriate news coverage.” “Learn – and report – history: Anyone who compares today’s economy to the Great Depression knows nothing about either,” write Dan Gainor, Julia A. Seymour and Genevieve Ebel, authors of The Great Media Depression. From the University of Michigan-Flint, Mark J. Perry is one economist who has been focusing on presenting positive and upbeat information about the economy. According to Perry, who warns against “irrational pessimism,” there are many differences between the depression era and today's economy – all of which indicate that our economy today is nowhere near the magnitude of decline or collapse as our media would indicate. • The unemployment rate averaged 17.1 percent during the Depression, and at its peak rose to more than 24 percent. As of December 2008, U.S unemployment stood at 7.2 percent, or rather, 92.8% were employed. • There were no unemployment benefits, Social Security or federal deposit insurance in the early 1930s. • People in the United States are nearly eight times wealthier now than they were in the 1930s. They spend only 10 percent of their incomes on food, compared with 20 percent to 25 percent during the Depression. About BMI:
"In this world, the optimists have it, not because they are always right, but because they are positive. Even when wrong, they are positive, and that is the way of achievement, correction, improvement, and success. Educated, eyes-open optimism pays; pessimism can only offer the empty consolation of being right."
Last year media reportage around the globe, particularly major U.S networks, repeatedly characterized the economy as not having been in this bad of shape since the Great Depression.
Surprisingly, media reportage in 1929 invoked a much more positive and optimistic outlook than the journalists of our era, who likened our current economy to a “house of cards,” (“Good Morning America”). Last year we read or heard the media producing many anxiety-producing questions, including: “Is the American economy heading over a cliff?” (Nightline).
• There were 9,000 bank failures during the Great Depression. Nearly 3,000 failed during the savings and loan crisis of the late 1980s and early '90s. Despite the highly visible failures of some large banks last year, only 117 out of 7,203 U.S. banks are now at risk and less than 1 percent of bank assets are held at those troubled banks. (Note: Stats confirmed as of October, 2008)
(SOURCE: The Flint Journal)
The mission of BMI is to audit the media’s coverage of the free enterprise system and to promote fair portrayal of the business community in the media.
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