Rosebud … when media becomes an oligopoly

I think that there’s going to be a lot of senior theses and doctoral dissertations coming out of journalism departments on the media coverage of this primary (sic) season. I think it was about as bad as the lead up to the Gulf War in which the MSM wanted so badly to get their Walter Cronkite in the trenches badge they just didn’t vet anything. We all know how costly and unpopular that debacle has become.  We also are beginning to see some soul searching going on in some journalism classrooms.

One of the first things we teach in microeconomics classes is the dysfunctional markets created by oligopolies and monopolies.  They lead to severe inefficiencies in the market and can create extraordinary profits for the owners of businesses or factors in those markets.  That is usually why we go after them with anti-trust legislation and regulation.  Even the famed free marketeer, Adam Smith discussed their dangers. They run up prices, restrict quantities, practice price discrimination, and take advantage of information asymmetries.

The creation of information asymmetries in a market for information is not only a problem in an economy, it is a weapon of mass destruction in a democracy.  Concentration of media in a few big players is not only wrong, it is dangerous and threatens the very principles we cling to as Americans.

We were warned, remember … rosebud? Concentration in any market limits information and hurts those who demand the service.  First, it makes information and the product costly.  If the producers of this product can practice price discrimination, they can offer various products and  various prices.  In other words, the rich and educated can find other sources of information, the masses are stuck with CNN, FOX news, and USA today.  Additionally, when rivalry is intense, the agents frequently spend more time focused on their rivals than on their consumers.  I believe this is most evident among the cable news stations who seemed to have identified their niche, then they just spin whatever else the other channel says to appeal to their clientele.  When they find a channel gets big ratings doing the latest missing blonde, the latest OJ adventure, or beating up on Hillary Clinton, they just go with it because their business is not about the customer, it’s about beating the rival.

I’m not a professional journalist.  I took journalism in high school and wrote on the school newspaper.  One year, I was fortunate enough to have some of that experience with Kurt Anderson because he and I attended the same high school.  However, that’s the extent of my journalism resume.  I am a trained economist and that is now what I teach.  I can’t look at media concentration, with authority, from any other position.  I can tell you all that economic theory says concentration in markets leads to highly inefficient outcomes.  In economics, that’s as bad as it gets.  As a U.S. citizen, I aver that it’s as bad as it gets for a country based on the principle of a free, plentiful, and active press.