Why didn’t they see it coming? Why didn’t the financial media tell us that capitalism was about to implode? How can it help us through the current climate of cuts and austerity? Since 2008 Financial journalism has had a lot of questions to answer.
That’s why we do research on it at Polis [indeed we have a seminar on September 22nd – email polis@lse.ac.uk if you are interested] and why the Centre for the Study of Financial Innovation held a public discussion with top business journalists like the BBC’s Robert Peston and MoneyWeek’s Merryn Somerset-Webb in the City this week.
In fact, there is lots of very good financial journalism in the UK and some of it’s getting better. Even the business people seemed to think so – including Sir Michael Bishop, who has been subject to great media attention in the past. The BBC has upped its game in this area and specialist magazines like MoneyWeek provide fantastic personal finance coverage and independent and hard-hitting analysis. But it can never be good enough.
Financial journalism will always disappoint those in a complex and basically boring business who bemoan the fact that the media is ignorant and that the public doesn’t understand (or care) about the finer points about annuities, dividends and compound interest rates.
Indeed, specialist financial journalism will always fail to reach the great mass of people who really need to know, as opposed to the silver surfers with time and money on their hand to investigate the issues and profit from the good financial journalism that is out there.
Some real barriers to progress were identified:
- The chilling effect of litigation and financial PR
- The lack of resource for investigation
- The lack of journalists who are passionate and expert about finance – as opposed to doing it by default
Some ideas were suggested to improve the situation. How about a compulsory Personal Finance GCSE in schools? Robert Peston also made the point that there needs to be a more sophisticated approach by companies to encourage engagement in financial affairs by the media and thus the public.
I would go further.
If you look at science, it has improved reporting of the subject by a concerted effort to address the previous faults of science reporting. A Science Media Centre was set up. Scientists were trained and encouraged to deal with the media. Media organisations made a deliberate effort to improve their coverage – for example of climate change. Money was put into research about science media. People like Ben Goldacre were prepared to use new media (as well as old) to speak out independently and critically both about science and science media’s faults.
That is what finance needs.
We also need to know more about what people understand about finance through the media. How do they get their information and what do they do with it? How good is the information? How can we improve journalist training? How good are our financial journalists? What are the codes and practices in respect of PR or law?
Polis is doing some work in this area but both the financial media and the financial industry itself needs to be much more involved. It won’t be able to improve the situation until it knows what the problem is.
And this is going to become ever more important. We already have to manage our own private financial affairs, now the government is hoping that we will be able to manage all our financial dealings with the state as well. That’s why financial journalism matters.
Charlie,
Your idea of a financial equivalent of a Science Media Centre is an interesting one but unfortunately it is not a flyer.
The trouble is science and finance are not the same. It suits the financial world to have financial journalists who are capable of being co-opted – who don’t challenge the elaborate smokescreen they puff up around their sector. Look at the world of fund management as an example. This is a sector that has repeatedly impoverished its customers for 50 years – whilst the people within it enrich themselves. Read a recent article I wrote for Qfinance to find out more. Yet the average personal finance journalist just regurgitates the spin from the fund management companies, rarely if ever challenging their internal economics.
Clearly the situation has changed somewhat since the crash of 2008 with banks that were barely investigated during the bubble years now coming under closer scrutiny and alot of bonus bashing going on. But what does not get taken apart is the new economics of the banking sector which has become more than the the most heavily subsidized industry on the planet.
Basically we need the whole premise of financial journalism, that it is serving the investors or acting as some kind of fawning trade mag to the titans of finance, to take its lead from the shift in mindset that has occurred at the FSA (of all places) since the crash.
Before the crash, the FSA assumed that board directors of UK banks (a) had integrity and (b) knew what they were doing. That has since been turned on its head and the FSA’s basic assumption now is that bank boards (a) lack integrity and (b) don’t have a clue what they’re doing.
Meant to adds some links to my previous comment.
My article about the fundamental flaws in the fund management sector can be found here:- http://www.qfinance.com/blogs/ian-fraser/2010/06/30/having-recognized-role-in-crisis-fund-managers-put-themselves-on-the-couch
A recent blog post in which I explained why we must stop the pretense that banks are private-sector enterprises can be found here:- http://www.ianfraser.org/banks-are-now-in-the-permanent-role-of-looters-as-described-in-the-akerlofromer-paper/
(see particularly the four paras from Yves Smith towards the end).
My final point, which builds on from the radical change of mindset that has occurred at the FSA (which arguably came five years too late), is that most financial journalists will have to become (a) better informed (c) more sceptical if they are to serve their readers (and society at large) better.
They need to stop dancing to the tune of PR firms like Brunwick, Finsbury and Financial Dynamics, which love to distract them with a patina of tittle tattle about takeover bids and the like and start thinking for themselves.
Here’s another good piece on Financial Journalism:
http://blogs.reuters.com/felix-salmon/2010/09/17/teaching-journalists-to-read/
I by financial blogger Felix Salmon (who is British born but works for Reuters in New York) which ponders the future of financial journalism.