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October 18, 2008



This has prompted a discussion about what is reasonable behaviour and what isn't. I think it is better to move it here, since we seem to have drifted away from Jo's original post.

That's what we said last:


Dilyan October 18th, 2008 at 4:20 pm 19

Mark, in saying that we need to have a good understanding of the basic forces that shape our livelihoods are you not pinning too much hope on understanding as a force that can induce change? The only people who probably understand how complex derivatives work are the ones responsible for the current financial crisis: being well-versed in their profession did not help them avoid catastrophe.
Sometimes the smartest people do the most stupid things. It’s just human nature to be unpredictable and illogical. If we get back to the 21% profit margin at TM regionals, it would seem only natural that shareholders will be happy. But they are not, as Trinity Mirror’s share price suggests. Are investors being unreasonable? Yes, they are. They are being greedy in wanting an even fatter margin. They are being scared that they may lose their money.
Does anyone have evidence that would suggest that people are more often reasonable than greedy or scared? What is the rationale behind believing that journalists are any different?

Markmedia October 18th, 2008 at 5:04 pm 20

@dilyan I do not agree that TM/JP etc shareholders are being unreasonable. From their perspective the highest return in investment is the most logical expectation. It would be different if they cared about journalism. In that case they might agree that short term high margin profitability might damage the long term survival of the journalistic project. I believe most shareholders (I may be wrong) probably don’t care, they want a product that gives high returns and will go to where these returns are available.
It is one of the reasons I believe that journalism is not well served by the PLC model.

Unless we have a basic understanding of the financial structures we exist in, we can never even start to influence policies and models that will determine the future of the industry we work in.
Just as we, as drivers, need to know where to put petrol in the car, air in the tyres and check spark plugs, we as journalists need to have that same level of technical and structural knowledge. It doesn’t make us mechanics nor financiers but allows us to avoid basic mistakes.

As to the derivatives issue: I wonder how many of the traders and their bosses were made destitute by the crash? Not many I think.


Firstly, I will argue that killing your golden goose because it only lays two eggs instead of three is unreasonable. Shareholders do not need to care about journalism, it's enough if they care for money. Dumping a profitable business in seemingly rude financial health to pursue short-term interests is neither logical, nor reasonable.

I agree with you that journalists need to understand how their business works. But I am wary of saying that proper education is the solution. It could help; but journalists who know their business will still be likely to act counter-intuitively.

I also agree the PLC is bad for journalism. It is bad for any kind of enterprise, actually, in the sense that PLCs' stockmarket performance is vulnerable to people's emotions rather than reinforced by strong fundamentals. But on the other hand the PLC is one of the most accessible ways to get money for (seemingly) nothing during a boom. Journalism has prospered thanks, at least in part, to funding by shareholders: this now is just the pay-off.

People have varying definitions of misery. Some people have lost their homes in the crisis. Others have seen their fortunes go back by a couple of million dollars. While one can say that losing your house is worse than losing two million (but still remaining a millionaire), it is not. The millionaire suffers as much as the little guy. That we will see this as unjustified will not soothe his or her pain.

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