Daily Archives: July 8, 2011

The crisis over Rupert Murdoch’s newspaper empire illuminates the structural crisis in Britain’s broken system of newspaper self-regulation. The closure of the News of the World, the crumbling of the edifice of obfuscations and lies erected over the past five years by News International to defend its indefensible activities, the widespread belief that more revelations about similar activities in other papers are yet to come and the manifest incompetence of self regulation in the British newspaper industry call for a radically different solution.

David Cameron, prime minister, rightly said that the Press Complaints Commission, the industry’s self-regulatory body, should be scrapped. But to create a new and better system there is a familiar dilemma about the regulation of newspapers, which must now be cut through.

On the one hand: they exist in a liberal democracy which values and guarantees freedom of opinion, freedom to publish and the right to hold powers to account. On the other: their wide distribution and power over news means that, when they lie, distort or report wrongfully – or, as with the current scandal, habitually break the law – then their actions affect the health of the society. This means they must be regulated.

This same dilemma is not true for broadcasters. They are regulated in Britain, and have a history which, for the most part, speaks to their independence, impartiality and willingness to investigate and expose abuse. Yet a significant part of the rationale for regulation is to ensure that the broadcasters are objective. Newspapers do not have that requirement, nor should they.

Regulation by the industry itself has been for two decades the only answer to calls for some form of public protection against press abuse. Yet this is clearly inadequate to the task. Those with an interest in a free and transparent press are many; currently, the only stakeholder in the PCC is the press itself, and it has failed in the largest challenge to its ability to self-regulate.

So we have a dilemma. State-backed regulation is seen as illiberal, and would be opposed (on liberal grounds) by all of the press. Yet self-regulation – paid for by the newspapers, dominated by News International and Associated Newspapers – has proved self-serving and supine.

The answer to this dilemma is not to create a new regulator with statutory backing. Instead it is to increase the group’s base of stakeholders – and to include in the number of institutions making up that base the government itself, as a representative of the public interest.

How would this work? When the PCC is replaced, a new organisation should be established, which I would call the Journalism Society, in a similar vein to the Law Society, the representative body for solicitors in England and Wales. This body should be open to being as global as the media are fast becoming. And it should be independent.

The Journalism Society’s stakeholders should include representatives of the government; the educational establishment; civil society (for instance relevant non-government organisations and policy institutes); industry and finance; and the news media. All of these would be committed, under its charter, to pluralist, independent, opinionated news media, working within the law.

This move would have a number of advantages. First, it would make clear that the interest in such news media is much wider than the press itself. Second, no one interest would dominate: the board would be so constructed as to preserve a balance of interests, and it would have no statutory powers.

Third, it would increase the financial backing for the organisation itself, allowing it to extend its scope, to conduct research and investigations and to be proactive in describing and managing the huge changes now under way in the news media – with a brief to ensure that these changes are in the public interest.

Finally, and more importantly, it would allow journalism to take itself seriously as a trade claiming a democratic mandate. It could set and patrol ethical standards, monitor training and qualifications and above all be a forum within which journalists could map out the nature and future of their craft at a time of rapid change.

Dame Onora O’Neil argued, almost a decade ago in her Reith Lectures, that the news media press the need for trust and transparency on others, but not on themselves. The News International affair will have done unintentional good if it ends that period of silence.

The writer is a contributing editor at the FT.

Response by Sunder Katwala

The age of accountability has come to the media at last

“I’m with you on the free press; it’s the newspapers I can’t stand”, as one of Tom Stoppard’s characters, Ruth, says in his play Night and Day.

The News of the World scandal, showing journalism at its criminal worst and dogged best creates an urgent task for defenders of a free press: how can its principles now be defended from the worst practices of the newspapers?

John Lloyd identifies genuine dilemmas about statutory regulation, acknowledging that they have been used too in a self-serving way by newspapers which are scathing about self-regulation in every other domain.

There is now an immediate opportunity – before any inquiry – for media practitioners to set out and publicly debate what a reformed Press Complaints Commission with teeth would look like.

But the media can now longer expect this debate to remain in-house.

And it is important to understand why cogent critics of the media’s ethos and sense of accountability have been marginalised within debate about media practice over the last decade. Figures such as Mr Lloyd or Onora O’Neill, the philosophy professor at Cambridge university, have been caricatured as lofty ivory tower academics and commentators, though their warnings about the threat to the media’s public legitimacy and licence to operate have been borne out.

Too many journalists see these as important debate for journalism schools, but not so much for newsrooms themselves. Inside every newsroom lurks the “dirty hands” theory of how to get results. It is held by liberal broadsheet editors as well as those of the red tops. The News of the World’s had legitimate scoops – such as the Pakistan bribery scandal – through subterfuge too.

The test of an effective PCC would be one that was aggressive and formidable when being stonewalled and lied to, but robust in defending aggressive journalism in the public interest.

Could that ever be captured by a rule book? It is about the ethos, powers – but it is about personalities too.

Peer review is necessary to media scrutiny. But we have a very clubbable media elite – and there is little confidence within it that really big calls would go against the proprietors or editors of the most powerful organisations.

So our media culture has been opened up by the rough and tumble of civic scrutiny and discourse. Some fear the blogosphere and social media can too easily turn into a tweeting mob. But the age of accountability has come to the media too at last.

The question of how journalism restores trust will no longer be for journalists alone.

The writer is director of a soon-to-be-launched organisation that will contribute to and inform media and public debate on migration, integration and identity. He is a former general secretary of the Fabian Society, a think tank.

As the August 2nd debt ceiling deadline looms ever closer, President Barack Obama has asked congressional leaders to work through the weekend. The hope is for agreement on a “grand bargain” that avoids disorderly disruptions to government payment obligations and creates, quoting the president’s remarks of yesterday, “an environment in which we can grow the economy and make sure that more and more people are being put back to work”. The likelihood is that the disruptions will indeed be avoided but, unfortunately, only through a “mini deal”.

To address its economic woes, America desperately needs to transition from a series of ad hoc measures to a more holistic policy approach. The notion of a grand bargain can be a critical enabler in this regard, especially if four conditions are met.

First, a grand bargain can serve as the catalyst for unifying diverse policy actions into clearer, more comprehensive drivers for growth and medium-term fiscal sustainability.

Vital areas include tax and spending reforms, much greater emphasis on growth enablers (including infrastructure, education and retraining), and meaningful steps to restore a more normal functioning of the housing, labour and credit markets. To be effective, they must be implemented as a package of reinforcing measures and not a series of standalone announcements.

Second, the grand bargain itself – especially if centred on the urgent need to address the country’s growing unemployment crisis – can help overcome the repeated difficulties that the administration has faced in outlining a credible economic vision. This is central to unlocking the considerable idle capital that is waiting on the sidelines for a medium-term roadmap before being committed to investment spending.

Third, it would help counter increasing nervousness among America’s foreign creditors. With the Federal Reserve completing its purchase of treasuries under QE2 last week, these creditors now hold the key to maintaining the low interest rates that are so critical for limiting the deterioration of the country’s debt dynamics.

Fourth, it would intensify pressure on other systemically-important parts of the world – particularly Europe and China – to join the US in striking their own grand bargains.

In Europe, this would take the form of a more credible and effective approach to the peripheral debt crisis, including opting for either greater fiscal union or proper debt restructuring and a meaningful improvement in competitiveness.

For its part, China needs to place greater faith in its consumers, allowing them to influence policy formulation as much as producers do.

All this is what should – indeed, must – happen if the US, and the global economy more broadly, are to put in place the conditions for high growth and financial stability. However, I worry that what is likely to occur in the coming days could be insufficient.

Aided by President Obama’s personal and highly visible involvement, American politicians are likely to meet the August 2nd deadline. The bad news in that this may only result in a mini-deal that repeats the bipartisan agreement that overcame the threat of a government shutdown on account of the continuing budgetary problems, though involving more meaningful commitments.

Such a disappointing outcome would fall short of what is required to energise America’s economy, accelerate job creation and enhance medium-term fiscal sustainability. Also, it would contribute very little to improving the outlook for the grand bargains needed elsewhere in the global economy.

Let us therefore hope that, if it indeed materialises, the mini-deal is only a means to a grand bargain down the road. It would be a tragedy if, instead, it were an end in itself.

The writer is the chief executive and co-CIO of Pimco, the world’s largest bond investor

Response by George Magnus

Even a mini-deal could get some Americans back to work

Mohamed El-Erian is unquestionably correct that the US needs a grand bargain to reform the country’s fiscal structure, reboot the economy’s employment-generative capacity and improve housing, labour and credit markets. But he’s also right, alas, to suspect this isn’t going to happen soon. I would add, “or pre-emptively”.

Politicians are too focused on the surge in populism and the increasingly ideological  wings in both major parties to offer the political leadership and imaginative thinking required for an effective bargain. They, and many others, have forgotten already the nature of the profound 2008-09 shock to our financial and economic system, and its Japanese-style consequences. The US is by no means unique in this regard, for the same leadership failures  are evident both in Europe’s approach to sovereign debt crisis management and in China’s approach to economic rebalancing. But the significance of US leadership for itself and the global system cannot be underestimated.

This summer, there probably will be a mini-deal to get the debt
ceiling raised, but it will be mechanistic and short-term, rather than the start of a comprehensive strategy, designed to lift America out of debt and repair its own economic imbalances.  One of the most worrisome “metrics” of America’s current malaise is that the proportion of working age people at work is no higher than it was in 1955.

So if the Congress is not under enough pressure yet to come up with a grand bargain, it could at the very least do two constructive
things. It could confirm its commitment to a significant,
medium-term debt reduction programme by agreeing some details about expenditure restraints and tax revenue expansion. And it could agree to cut employer payroll taxes or payroll tax holidays, and other measures to help get some of the 10m who have dropped out of the labour force since 2007 back to work.

George Magnus is a senior economic advisor at UBS

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