Too Thin to Illuminate
He Said, She Said, hereafter HSSS, is the bane of actual journalism--I thought everyone knew that by now. The point of telling readers that experts disagree is lost unless the journalist explains why they disagree, whether they have good reason to disagree, whether their claims make sense. Otherwise we're left with a sloppy Whatever.
Today's object lesson in how not to help readers is Eric Dash's "If It's Too Big to Fail, Is It Too Big to Exist?" in the NYT Week in Review. The "It" refers, of course, to gargantuan banks, or bank-like behemoths like AIG. These huge money-movers create giant mayhem and then walk away with subsidies. Is it right for them to make out like bandits banks?
Eric Dash has the right idea, to peek under the curtain of Too-Big-To-Fail, but gets us not a half-step toward an answer. The experts are quoted saying things like "I don't think you can completely turn back the clock" (Lawrence Summers) and "You can't put that genie in the bottle again," (Frederic S. Mishkin, a former Federal Reserve governor).
If "there's no going back to the days of small banks" (Dash's paraphrase of Summers), just why is that? What do those like Sheila Bair of FDIC, and Paul Volcker, former head of the Fed, say to this claim? (It doesn't deserve the name of an argument.) Who would gain, who would lose if we went back to small(er) banks? What would be some predictable knock-on effects?
If there's a point to a Week in Review, it's to advance the discussion, not simply to state HSSS and shrug that substantial reform is difficult.
Update: I just got to today's business section, where Gretchen Morgenson's column, under a pungent headline ("Too Big to Fail, or Too Big to Handle?"), goes to the jugular with an apt observation:
More than two years after the crisis began, "too big to fail" remains "too problematic to address" with anything other than more souped-up regulation."
and an apt question:
Given that earlier efforts at policing these entities failed so miserably, why should anyone think that a new-and-improved regulatory approach will fare better?
"If "there's no going back to the days of small banks" (Dash's paraphrase of Summers), just why is that?"
Because we have nothing but Republicans and New Republicans (see Bill Maher) representing us?
June 21, 2009 11:32 AM | Reply | Permalink
Granted I read Adam Smith a long time ago - but here goes: He warned against 'bigness' which, from his vantage point referred to monopolies, cartels, syndicates, consortia...saying that such entities limited or even eliminated competition and that, in his nut shell, was what was wrong with mercantilism. (No competition, no growth.)
If too-big to-fail has become a biblical truth, it's going to be almost impossible to excise it from standard economic theory. But if 'bigness' is attacked from the evidence of today's stagnant real economy, it might be successfully challenged.
June 21, 2009 1:06 PM | Reply | Permalink
Remarkable optimism after all this time, I must say--expecting the Times' Week in Review to advance the argument.
In any case, I think it's clear enough why "too big to fail" will never go away, at least as long as we have this system, and Marx pinned it down: capital accumulation. In capitalism, it's an uncontrollable process, and over the long run it means that big becomes ever bigger, even though it temporarily runs into a rough patch now and then, as it has the last couple of years. But as soon as the financial powers that be get back on their feet, thanks to the Treasury, Federal Reserve, and Congress, it's back to business again at the same old lemonade stand.
Of course, now that we have approached or possibly already reached the carrying capacity of the earth, the rules of the game will have to change somehow, but who knows how or when?
June 21, 2009 1:43 PM | Reply | Permalink
C'mon! Nobody reads the first six pages of "WIR" -- ever.
If they weren't attached to the oped pages, they'd be consigned to the kitty-litter box, immediately.
June 21, 2009 6:08 PM | Reply | Permalink
I am one of those nobodies. The first pages of WIR have been the first thing I go in the Sunday paper for years. The oped pages, on the other hand, those I have to force myself to read.
I happen to prefer analysis pieces to straight-out op-eds and to straight-out reporting. Yeah, long analysis pieces are better than short ones, but sometimes, like Sunday morning, you are not in the mood for a gazillion page New Yorker article, and a few short thoughts on a topic might spark your one.
My favorite pieces in WIR are when they give a "boots-on-the-ground" reporter a chance to write an analysis piece on the beat he or she has been covering. I like to know what they are thinking after doing the reporting, not only does it help me think on what's happening with their beat, it might help me know when they might be spinning reporting or not, what baggage they might bring to the topic. And I like that the Times had a tradition of keeping those two kinds of articles separate, and I think it's sad that they are less and less doing that separation, instead more and more imitating of other media and inextricably blending the two, like the blogosphere does.
June 21, 2009 6:43 PM | Reply | Permalink
. . . the first thing I go . . . .
Even before Frank Rich? Say it ain't so.
June 21, 2009 8:57 PM | Reply | Permalink
Oy, I find it particularly so in that case. I think Frank should never have left Arts, where he had great expertise. In moving to op-ed, it's my opinion that he went from being a superb analyst of pop culture, to trying to participate as a player in political pop culture in a mediocre manner.
June 21, 2009 10:05 PM | Reply | Permalink
Prof. Gitlin,
I notice a change in the quality of Week in Review the last 6 months or so.
It is becoming more like one would presume from its name, a summary of the week's news for people who were too busy to read the paper all week, and less of what it used to be, like you termed it, to "advance discussion" on issues in the news.
Seems like a convenient way to cut down on highly paid staff, but a pity.
June 21, 2009 6:52 PM | Reply | Permalink
And an extra real pity: the section also seems to pay more attention to covering "what's hot in the blogosphere" now. That's the last thing I need from those editors. What I need them for is to give me an alternative to that popularity contest.
June 21, 2009 6:59 PM | Reply | Permalink
I like the way Sort of Buddhist thinks.
Let's go back to the 'what's wrong with small' part first.
Nothing. Microfinance is the lifeblood of local transactions. Any time the state controlled money monopoly fails, people are forced to adopt other solutions. The problem with that is lack of convertability across localities causes outsourcing problems for thing not available locally.
That is, of course, the problem with big states. They impoversh profit centers defenseless before their rapacity. Nor has much changed since Marie Antoinette and her 'let them eat cake' ; bureaucracy has no limits to growth save starvation. That includes transnationals : now hitting the wall of monopoly and a situation where the old rules no longer work.
The how or when we're about to find out, as state and country governments no longer can pay for services.Water monopolies are well placed here,although poisoning the supply means the potential user base will drop sharply. What's that about ? End of an Era on my Links page under Water - wealth and power : if the damn thing doesn't show a 404 error. Then it's scroll through and I doubt the patience for that.
Nothing that isn't in the file there anyway : just not separated out.
Hydraulic Empire : Wikipedia just in case nothing else works.
Best I get back to work transferring information.
Opit's LinkFest! http://my.opera.com/oldephartte/blog/ going to opitslinkfest.blogspot
June 21, 2009 7:56 PM | Reply | Permalink
As a somewhat related aside, I read a book many years ago called, "I Can Sell You Anything". Don't recall the author's name, but he was a former advertising exec. His book was a sort of tell-all about how ads (particularly TV commercials)actually work - by implying strong substantive claims, without actually actively asserting such. Funny how an obscure little paperback found at a yard sale can have so much influence, but I've never looked at language quite the same way since.
To make a long story short, I recall his discussion of 'weasels'(ie, words that appear to support a given claim, while actually meaning nothing). Good examples are, 'some', 'many', 'may', ,'can', etc. When I start seeing weasels in headlines (ie, "Some Economists Express Doubts About Obama Healthcare Proposals" - 2 weasels, the 2nd is slightly more subtle), I know I'm in the presence of advocacy or speculation, as opposed to news. I see an abnormally lot of that these days.
June 22, 2009 8:08 AM | Reply | Permalink
I've got to get that book. In the end, however, Machiavelli was probably right when he said, "The great majority of mankind is satisfied with appearances as though they were realities."
June 22, 2009 2:03 PM | Reply | Permalink
As long as the executives that create the too big to fail corp don't have to pay any penalties when the shit hits the fan in said corp.; 'too big to fail' will continue to exist.
As to "he said, she said" journalism, Wolf Blitzer is king with David Gregory following close behind.
June 22, 2009 12:28 PM | Reply | Permalink
I think that the bottom line is that, in foreseeable political conditions -- like Congress unable to even readily embrace card-check, a MEANINGFUL public option (let alone seriously consider single-payer) and climate legislation that comes anywhere NEAR being adequate -- we are not going to see a restructuring of the financial system to rid it of institutions that are too big to fail, whether we SHOULD or not.
Now, as for whether progressives need to get together collectively for some kind of unified alternative economic program, as I've suggested w/o response in a gazillion Reich column threads, well -- here's another issue for the "unaddressed by mainstream politics, and unlikely to be anywhere near what the majority of Democrats want" pile.
That pile is getting bigger by the day, and no one seems to be getting progressive leadership together to DO anything effective about it
June 22, 2009 6:43 PM | Reply | Permalink