Policemen of the Press


Senators Humphrey and Javits, with much fanfare, have introduced and promoted The Balanced Growth and Economic Planning Act of 1975. Its purpose, declare the architects of the bill, is to establish an agency to "guide the economy in a direction consistent with our national values and goals." For the movers and doers of the economy often don't know just what those national values and goals are. How could they? As stressed by Professors Galbraith and Leontief, as well as other supporters of centralized planning, enormous information problems confront the managers of individual firms. So finally those kind Harvard souls, along with their aficionados in Washington, have risen to help the beleaguered entrepreneurs: national economic planning is simply a means of providing information and thereby assisting them in making forecasts about future needs for productive inputs and consumer goods. And it is nothing more than that, its supporters endlessly reassure us—as though only an unthinking soul would have suspected otherwise.

Yet the Humphrey-Javits act, while stressing the value of information, appears to ignore information markets themselves. Information markets, however, are basically no different from goods or product markets and are rife with the same woeful inadequacies. Any dedicated planning advocate can ferret out the types of market failure typically cited for product markets and construct a parallel rationale for intervention in information markets. How could our farsighted legislators have neglected an area of such importance (and with such a vast potential for meddling)? I propose herewith, with all the arguments necessary to convince the wayward, a planning plan for this market.


Economic planning requires information; hence its results hinge directly on the quality of the information available. There has been a veritable explosion of knowledge in the last 30 years. Yet our information system, including all forms of media, has developed in a haphazard and unplanned manner. As a result we are now faced with an information crisis.

In view of the urgency of this crisis, I propose a companion bill to the Humphrey-Javits (HJ) Economic Planning Act. The proposed legislation supporting the HJ act will be known as The Balanced Knowledge and Information Planning Act of 1976. The purpose of this act is to insure that information necessary to successfully implement the HJ Economic Planning Act will be available when needed. It will relate to the comprehensive planning of information in all areas except education. (Education is to be exempt from the provisions of the bill to avoid wasteful overlap and duplication of HEW programs, which already manage information there.)

Why is this legislation needed? A bit of reflection reveals that the same problems are present in the information market (the market for ideas) as those everyone knows to be endemic in markets for other goods and services. Decision making comes off as unplanned, shortsighted, and uncoordinated when one considers the resources available for the dissemination of information through various media and then surveys its actual dissemination. The market, with its agents operating on the profit motive, is relied upon to determine how information is disseminated. In a modern industrial economy, however, a collection of decisions made by individuals pursuing their own selfish interest does not guarantee that social needs will be met. Market "failure" is observed in the information market just as in markets for other goods and services. Problems arising from a lack of planning in this sector are manifested in a variety of ways.

First, there is a vast waste of resources in disseminating information to the citizenry. Everyone has been made aware of the wastes associated with the production and marketing of toothpaste, detergents, aspirins, "low price spreads," and other products that are differentiated mainly through advertising. Media entrepreneurs, in a similar fashion, constantly strive by advertising to differentiate their products in the eyes of the consumer. We are bombarded daily with repetitious news on radio and television, in newspapers and periodicals. It seems clear that much of the advertising of these artificially differentiated methods of disseminating information serves to create the very wants they allegedly serve. Borrowing Professor Galbraith's terminology, our desire for particular newspapers, TV programs, etc., are not innate wants but are created by the process by which they are satisfied. (The same holds for our preferences for public officials and legislation—local, state, and national.)

Second, pollution problems are pervasive in the information area just as in other markets. The polluting industrial firm defiles the environment, engendering costs to society that exceed the direct costs (costs borne by the firm). Similarly, erroneous and misleading information has a cost to society far greater than the direct costs of disseminating the information. One piece by a mossback columnist can lead thousands of people to vote against public officials who promote the public interest by supporting progressive legislation, including increases in minimum wages, consumer protection, land-use planning, credit controls—even comprehensive economic planning.

Third, consumer ignorance is a notorious problem requiring mandatory safety devices for autos, truth-in-lending laws, unit packaging, and other legislation to protect the consumer. Casual empiricism reveals that the laissez-faire system of disseminating information also has problems. Results obtained by Gallup, Harris, and other reliable pollsters indicate that most citizens have an abysmally small amount of information (or concern) about pressing economic and social issues, domestic or foreign. Most citizens must grope in the dark in choosing between various political parties, candidates, and programs. It is clear that no reliable mechanism in the modern economy relates information needs to available resources.

Fourth, fraud is pervasive in the information and knowledge area. During the past decade, politicians have promised us more guns and more butter in a full-employment economy. They have also promised that, if elected, they would represent all the people rather than special interests. Special interest legislation continues to be enacted, however, as evidenced by the August 1975 congressional pay raise. Senator Kennedy indicated a recognition of this problem of mendacity on the part of public officials with the recent bill to enable citizens to sue public officials for making false statements. Yet public officials have no monopoly on fraudulent statements in the information sector. Newspaper editorials, for example, decry the level of unemployment and simultaneously plead for increases in the minimum wage and in unemployment compensation. Regulatory agencies such as the CAB and ICC, though ostensibly designed to protect the public, without the public's knowledge, frequently serve the companies being regulated.

The protection from fraud in product advertising is distinctly superior to that in information markets. The FTC and FDA are constantly alert to potentially harmful goods and services and to misleading advertisements of commercial products. Yet in the information market, the consumer has no protection from nefarious ideas or from unscrupulous vendors of innocuous bromides. The hapless citizen is carefully protected from false advertising about Wonder Bread, Listerine, and Geritol. At the same time, he has had no one to warn him that his favorite newspaper may not contain all the news that's fit to print.

The future welfare of society hinges on information and knowledge. The job of keeping our information system in good order, as Professor Leontief indicates in connection with economic planning, "requires lifting the hood, observing and, if necessary adjusting the operation of all moving parts of the engine, and occasionally replacing those that turn out to be defective." The proposed information planning bill would set up an Office of Balanced Knowledge and Information Planning in the Executive Office of the President. The bill would require the president to submit a Balanced Information and Knowledge Plan to Congress biannually.

Yet this is not enough. Information problems exist at all levels, and a comprehensive information and knowledge policy must be developed. Toward this end, the bill would also encourage and support information-planning agencies at the regional, state, and local levels.

How would information planning be achieved? The same range of instruments being proposed for economic planning can be used to achieve the planning goals for information, of course. The following examples are illustrative of a wide range of specific measures possible in information planning.

Representative Reuss has already broken new ground on the road to information planning with his proposal to require that banks allocate credit in a manner consistent with the public interest. This proposal recognizes that certain capital expenditures, though more risky, are often more productive. Most people would agree, for example, that credit extended to construct low-cost housing will make a larger contribution to social welfare than credit extended for luxury apartments. Yet without credit controls, banks may well charge a higher interest rate to the builder of low-cost housing. Only the most callous among us will object to giving the poor a break.

Similarly, what public-spirited citizen could complain if credit preference were extended to whichever media strive to elicit public support for activities deemed to be in the public interest, as determined through the legislative process? Challenge, The Magazine of Economic Affairs, with its strong advocacy of comprehensive economic planning, would be an obvious candidate for public support (if the Balanced Knowledge and Information Planning Act were enacted).

Many worthwhile publications dedicated to the public interest have limited circulation and cannot compete with mass circulation publications that pander to current public tastes, which can only be described as vulgar and meretricious. Since advertising in such publications often skillfully depraves and distorts popular desires, tax incentives and subsidies might be used along with credit controls to strengthen those journals (or other media) that are dedicated to the elevation of public tastes, to promoting the public interest, and, indeed, to a rational planning process.

As the current "invisible" energy crisis (as characterized by Representative Ullman) is increasingly recognized as a harbinger of the age of scarcity, more attention must also be given to problems of waste in the dissemination of information. The wasteful duplication of news and other television programming can be eliminated through the allocation of broadcast licenses and more judicious control of programming by the FCC. The problem of waste and duplication in publication of books, papers, magazines, etc., will likely require a new regulatory agency with powers over entry and content of written material analogous to powers of the FCC in the broadcast field. An alternative would be to expand the authority of the FCC to include the fourth estate.

A concerted effort (Positive Action Program) must be used to achieve a better balance of information and knowledge in all media. The carrot as well as the stick can be useful in creating an information system that is consistent with the public interest. As British Professor H.D. Dickenson, a renowned proponent of centralized planning, indicated in 1939: "The powerful engine of propaganda and advertisement, employed by public organs of education and enlightenment instead of by the hucksters and panderers of private profit-making industry, could divert demand into socially desirable directions while preserving the subjective impression of free choice."

The potential of economic planning cannot be fully developed while neglecting a vital ingredient of any plan—information. Markets involving information and knowledge are no less capricious than those for other goods. Thus, it is no less vital to guide the information and knowledge sectors in a direction consistent with our national values and goals. Planning proponents must not neglect the information aspect of comprehensive economic planning. National planning must not be allowed to founder in the sea of knowledge.

E.C. Pasour, Jr., whose areas of interest are price theory and public finance, teaches in the economics department at North Carolina State University. He has published in academic journals, as well as The Alternative and The Freeman.