PAUL KRUGMAN: The important thing is not the shared equity. I'm sorry, it's hard to avoid lapsing into jargon here. But 85 percent, at least according to the counts over the weekend, 85 percent of the money is going to be a loan from the government, which is a non-recourse loan, which means that it's backed only by the assets that these guys are buying, which means that if the thing loses more than 15 percent of its value, which is highly, you know, possible, given how uncertain these things are worth, then the investors, the private investors, just walk away. So there's-exactly, it's a heads I win, tails you lose. If the stuff-you buy something at $100 and it goes up to $150, you make $50. You buy it at $100 and it goes down to $50, then you only lose $15, because the other $35 gets even [sic: eaten] by the taxpayer. So it's a-it's the same thing.
It's basically what happened with savings and loans in the 1980s. They were deregulated and basically put in the position where the deposits were guaranteed, but the owners of the banks could do whatever they wanted, and so they took these huge risks, and most of the risks turned out bad. But if the risks turned out bad, it was the taxpayers' problem, not the bank owners' problem. Same thing here. They're deliberately setting it up, so that there's this huge incentive to-you know, basically where the upside belongs to the private investors, but most of the downside belongs to you and me.
AMY GOODMAN: So you socialize the debt, you privatize the profit. Why-
PAUL KRUGMAN: Yes, it's-you know, it's, yeah, lemon socialism. The minuses are the taxpayers; the pluses are the private investors.
First off, what should be clear from these two exchanges is that Goolsbee is telling the truth, but he's being deeply deceptive at the same time. Sure it's true that tax payers both win or lose together. But the question is, "How much?" And the answer is simple: taxpayers take on much more risk, while investors stand to pocket much more profit, as Krugman explains with his more detailed explanation. And it's precisely that more detailed explanation that's being sidelined in the mainstream political discourse. (Also worth noting: any investor losses will inevitably be used to write down tax liabilities, so taxpayers will be subsidizing investors at least twice.)
If these two viewpoints were presented together, then we would have fulfilled the basic preconditions for an infomred public debate, including in the process a potential consensus on the meaning of shared risk--is it any sharing? Or do there need to be standards of fairness and equity?
Beyond that, of course, Krugman goes on to provide an important historical reference point--the 1980s S&L debacle. And, of course, this sort of historical contextualizing is absolutely vital in order for public debates to grapple realistically with the alternatives presented.
For a larger-scale overview of what's going on here, it's helpful to consider the framework advanced by media scholar Daniel C. Hallin in his 1986 book The Uncensored War. Instead of the standard "objective reporting"/"opnion page writing" distinction, Hallin proposed a 3-sphere model:
which Jay Rosen summarized on his PressThink blog back in January:
1.) The sphere of legitimate debate is the one journalists recognize as real, normal, everyday terrain. They think of their work as taking place almost exclusively within this space. (It doesn't, but they think so.) Hallin: "This is the region of electoral contests and legislative debates, of issues recognized as such by the major established actors of the American political process."
Here the two-party system reigns, and the news agenda is what the people in power are likely to have on their agenda. Perhaps the purest expression of this sphere is Washington Week on PBS, where journalists discuss what the two-party system defines as "the issues." Objectivity and balance are "the supreme journalistic virtues" for the panelists on Washington Week because when there is legitimate debate it's hard to know where the truth lies. There are risks in saying that truth lies with one faction in the debate, as against another- even when it does. He said, she said journalism is like the bad seed of this sphere, but also a logical outcome of it.
2. ) The sphere of consensus is the "motherhood and apple pie" of politics, the things on which everyone is thought to agree. Propositions that are seen as uncontroversial to the point of boring, true to the point of self-evident, or so widely-held that they're almost universal lie within this sphere. Here, Hallin writes, "journalists do not feel compelled either to present opposing views or to remain disinterested observers." (Which means that anyone whose basic views lie outside the sphere of consensus will experience the press not just as biased but savagely so.)
Consensus in American politics begins, of course, with the United States Constitution, but it includes other propositions too, like "Lincoln was a great president," and "it doesn't matter where you come from, you can succeed in America." Whereas journalists equate ideology with the clash of programs and parties in the debate sphere, academics know that the consensus or background sphere is almost pure ideology: the American creed.
3.) In the sphere of deviance we find "political actors and views which journalists and the political mainstream of society reject as unworthy of being heard." As in the sphere of consensus, neutrality isn't the watchword here; journalists maintain order by either keeping the deviant out of the news entirely or identifying it within the news frame as unacceptable, radical, or just plain impossible. The press "plays the role of exposing, condemning, or excluding from the public agenda" the deviant view, says Hallin. It "marks out and defends the limits of acceptable political conduct."
Anyone whose views lie within the sphere of deviance-as defined by journalists-will experience the press as an opponent in the struggle for recognition. If you don't think separation of church and state is such a good idea; if you do think a single payer system is the way to go; if you dissent from the "lockstep behavior of both major American political parties when it comes to Israel" (Glenn Greenwald) chances are you will never find your views reflected in the news. It's not that there's a one-sided debate; there's no debate.
Rosen goes a little off in the last paragraph when he suggests that who "don't think separation of church and state is such a good idea" are confined to the zone of deviancy. But overall, he's done a good job of laying out the basics here. However, that was Hallin's 1986 take, looking back at the Vietnam War era, and obviuosly things are somewhat different now. Indeed, Rosen's piece was titled "Audience Atomization Overcome: Why the Internet Weakens the Authority of the Press:, and in a bolded summary at the top, Rosen wrote:
In the age of mass media, the press was able to define the sphere of legitimate debate with relative ease because the people on the receiving end were atomized-- connected "up" to Big Media but not across to each other. And now that authority is eroding. I will try to explain why.
So it's useful to look at Paul Krugman, with this particular interchange as a focal point, as an entry point for suggesting how Hollin's model may be changing. Or course, as Rosen himself noted, there were always more subtleties, the spheres aren't sharply divided by bright neon lines. But I think that what we're seeing now is more than just an increased blurring of the boundaries. Krugman is, after all, a Nobel Prize winner. And so is Joe Stiglitz. Both have appeared recently on Democracy Now!, which is a kind of program that had no parallel in the Vietnam Era, which certainly isn't part of the system of elite discourse that Hallin's model represents.
And yet, Democracy Now! is prominent enough that it has significant influence, even if it can be officially ignored. It hosts the kinds of debates also seen widely in the blogosphere, the peaks of which also now show up on Keith Olberman and (especially) Racheal Maddow on MSNBC. And so there is, in effect, a shadow media system in which there is a very different sphere of legitimate controversy, much as academia has a different such sphere, much of which also intersects with the blogosphere.
Back in 2001, Bush's tax cuts definitely were a matter of "legitimate controversy", and Krugman, as then a rather new presence on the NYT editorial page, weighed in on them. But despite his prominent place in the media sphere, and despite his professional expertise, the arguments he advanced did not receive the sort of weight one might have expected. Indeed, the Bush tax cuts passed in a manner that would have, quite frankly, been inconceivable during the Vietnam War Era. For one things, as Krugman argued, the Bush numbers never did add up. For another, clearly related to this, Bush refused to even begin discussing his own military budget until after the tax cuts. Unable to make a sufficient impact through normal means in the elite media, Krugman was reduced to having to write a quickie book, Fuzzy Math, to get his argument out, much as Michael Moore's Fahrenheit 9/11 was the only way to raise certain fundamental issues about the Iraq War, which were completely excluded from the realm of elite media.
What all this is leading up to is both simple and complex: If one is to keep Hallin's 3-sphere model, one finds the likes of Krugman, Stiglitz and other recognized experts (such as Nouriel Rubini) largely confined to the "realm of deviance" despite the fact that their existence cannot be denied. (The actual contents of their arguments, however, is another matter, as I believe the example shows.)
Therefore, the model, though still useful (far moreso than the charade of objectivity everywhere), is clearly outdated, and needs to be replaced. That's the simple part.
The complex part is what to replace it with. And here I have no ready-made answers (I said this part wasn't simple). But I do have what I hope is a helpful set of suggestions, which I hope to expand on some more this weekend:
(1) Replace the Hallin's 3-fold division with a more gradiated scale, ala the Oberton Window, which retains the two extremes, but gives more nuance to what lies between.
(2) Attach these gradations specific issue debates, separately.
(3) Map these gradations on three different scales--macro, meso- and micro.
(4) Apply this model at the level of individual media, and develop aggregate models by combining them in different ways for different purposes.
This last suggestion is key, for example, in mapping how Krugman's explanation of his basic argument is, in effect, confined to the realm of deviance on Face The Nation, but lands squarely in the realm of legitimate controversy on Democracy Now!.
"What is the purpose of such a complicated sort of model?" one might well ask. "Who would even want to implement it, and why?" My answer right now, since I'm not even proposing a specific model, much less building it, is largely hueristic--that is, it's concerned with how it guides us to think. Adopting this kind of model will tend to enhance our objectivity, giving us a greater ability to see our own media decisions--as consumers, participants, creators--in the same terms as those we most regularly criticize.
After all, sites like Open Left have their own spheres of consensus and deviance, as well as the more nuanced realms between them. The sphere of consensus here may be pretty small--we tolerate lots of debates that other progressive sites may be much less welcoming to. But on the other side, we certainly have had our trolls who are banned, roughly defining our sphere of deviance. And it can't help but be a good thing to be honest and upfront about such things. The more we can stand outside ourselves--even just in theory--and evaluate what we do in the same terms as we talk about Faux News, Nightline or whatever, then the more reality-based we can hope to become.
Finally, one more basic point: one other reason that Hallin's model is running into problems is that the sphere of consensus itself is shattering. One way of thinking about hegemony is that it involves the management of the sphere of consensus, and how that, in turn, influences the sphere of legitimate controversy, and defines the sphere of deviance. But the one-sided hegemonic warfare of the right has significantly reshaped the sphere of consensus. (Rosen's claim that "Consensus in American politics begins, of course, with the United States Constitution," hadly seems meaningful, given how wildly anti-constitutional the GOP has become since the "Gingrich Revolution," Bush v. Gore, etc.) Now, however, we've entered into a period of party system realignment, and re-redefining the sphere of consensus is one of the things that's typically up for grabs when a new party system is established. |
