The collapse of the sub-prime lending market with all its attendant effects took a lot of people by surprise this summer. (But, as we’ve previously blogged, not everyone.) Should we have been so surprised? Perhaps those with a vested interest in the industry were blinded by their own need to believe things were just fine, but shouldn’t the business press have been asking the hard questions that revealed the cracks slowly creeping along the surface of the mortgage market?
Yesterday, Martin Lobel, a partner at Lobel, Novins & Lamont, a Washington, DC, law firm, and chairman of the board of Tax Analysts, asked just this in an article entitled “Have Business Reporters Lost Their Souls?” on the Nieman Watchdog, the website for the Nieman Foundation for Journalism at Harvard University. His thoughts:
Most press coverage of economics and business could just as easily be applied to horse racing. The Dow is up. The Dow is down. So and so bought another company in a leveraged buyout. Yawn. Is it any wonder that most readers skip those stories?
Why didn’t the press alert their readers, most of whom are middle class, to the dangers of maintaining their life style by borrowing against the equity in their houses?…. Why didn’t the press alert readers to the fact that the music was inevitably going to stop because housing prices were far above any rational economic level and that many people were going to be left without chairs to sit on?
The article is chock full of questions we, the business press, should have been asking. (”Why was productivity increasing, but not wages? Are American CEOs really worth 10 times their British counterparts?”) Hindsight is always 20/20, and to some degree the business press can’t be held accountable for not being oracles or prophets when some of the smartest minds in business and politics failed to see this coming.
Plus, some reporters are asking these questions. Here are pieces from the WSJ and Forbes on why the compensation of American CEOs is high compared to their British counterparts. Both note something Lobel ignores — the gap is rapidly closing. And here’s a piece from Foreign Policy’s “21 Solutions to Save the World” in which a Harvard professor argues for a maximum wage.
Still, as much as it stings us here at BNET, we have to admit that Lobel’s criticism has some merit. Some journalists do cover business like they would a horse race, focusing on the relative merits of various contenders and failing to examine the institution as a whole. A few more tough questions about the assumptions nearly everyone takes for granted would make for a lot more surprising stories, and maybe even for a stronger, more just economy.
