Truth in Advertising on the Newspaper Bailout


(Guest post by Greg Forster)

You may have heard that Sen. Benjamin Cardin is proposing a government bailout of the newspaper industry.

Some enterprising legislator who loves free speech should propose an amendment to the bill stating that any newspaper accepting its terms shall be required to change its name to PRAVDA. Truth in advertising!

Actually, “bailout” may not be technically the right term. Cardin swears his plan involves “no infusion of federal taxpayer money.”

Note the word “federal.”

Instead of handing out cash, which would make government the de facto owner of America’s newspapers (as the examples of GM and AIG show all too clearly), Cardin would allow newspapers to reorganize as nonprofit “educational” institutions. But since the law already allows nonprofits to publish and distribute their own newspapers if they want to, the only possible rationale for Sen. Cardin’s proposal is that it allows newspapers to continue charging money to cover their costs while also recieving tax-free subsidies.

And who would be doing the subsidizing? Even if government (at the state and local level) doesn’t do it directly, it’ll do it indirectly. Politicians have lots of wealthy friends who would love to have their own pet newspapers.

In fact, Cardin’s proposal is actually worse than a direct government subsidy. At least a direct subsidy would be on the books and subject to disclosure, oversight, and some level of accountability.

Cardin invokes the old Jeffersonian saw that it would be better to have newspapers without government rather than government without newspapers. Yes – but either of those would be better than having government newspapers.

Even though the proposal is obviously going to go nowhere because it fails the laugh test, you’ll still get a lot out of reading Michael Kinsley’s deconstruction of it:

Few industries in this country have been as coddled as newspapers. The government doesn’t actually write them checks, as it does to farmers and now to banks, insurance companies and automobile manufacturers. But politicians routinely pay court to local newspapers the way other industries pay court to politicians. Until very recently, most newspapers were monopolies, with a special antitrust exemption to help them stay that way. The attorney general has said he is open to additional antitrust exemptions to lift the industry out of today’s predicament. The Constitution itself protects the newspaper industry’s business from government interference, and the Supreme Court says that includes almost total immunity from lawsuits over its mistakes, like the lawsuits that plague other industries.

Kinsley notes that just as capitalism built newspapers, it’s now destroying them in order to build something better:

But will there be a Baghdad bureau? Will there be resources to expose a future Watergate? Will you be able to get your news straight and not in an ideological fog of blogs? Yes, why not — if there are customers for these things. There used to be enough customers in each of half a dozen American cities to support networks of bureaus around the world. Now the customers can come from around the world as well.

There’s a good Michael Kinsley who writes about issues and an evil twin Michael Kinsley who smears his opponents with reckless disregard for truth; this column is  about as good as the good Kinsley gets.

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