Earlier today, Matt Welch took a few well-deserved shots at Ezra Klein and his novel solution to the economic troubles facing his employer, The Washington Post. You probably don't need it, but I'll give you a hint anyway: it involves higher taxes and a government stake in the news business! Welch links to a Klein article from 2007, in which the cheeky chappie discovers that—surprise!—the Europeans have "solved" (his word) the problem confronting American newspapers in a way "free of government interference." As usual, it's Sweden (total marginal tax wedge a paltry 70%) that provides the perfect example:
Sweden, for instance, has a system dedicated to encouraging reportorial competition. They allocate money to all but the dominant paper in a given market, so as to ensure that no town is stuck being dependent on a single newspaper or news source. The system is fully automatic, and works off a transparent and perfectly predictable formula. And the result? According to Daniel Hallin, chairman of the department of communication at the University of California, San Diego, the implementation of this system was concurrent with "a shift toward a more adversarial press. It is actually very strong evidence that press subsidies don't lead journalists to be timid."
First, it isn't exactly true that "all but the dominant papers in a given market" receive subsidies. Stockholm's two tabloids, Expressen and Aftonbladet, receive no support from the government. Subsidies are reserved for the so-called morning papers, not the trashy "evening papers" (which, rather confusingly, also come out in the morning). Second, it is technically wrong that the largest paper in a particular market is prevented from receiving subsidies. The largest "quality daily" in Stockholm, Dagens Nyheter (DN), receives no direct subsidy but in 2008 applied for government assistance because, according to the country's "press support" rules, if it reaches less than 30 percent of potential readers in Stockholm it is entitled to a yearly bailout. DN's CEO told her own newspaper that, considering the current news market, "It would be financially irresponsible not to seek [subsidies]."
The government denied the paper's request this year, though they have already reapplied for 2010. It's closest "quality" competitor, Svenska Dagbladet, last year received $8.4 million in subsidies, as did Skånska Dagbladet, a medium-sized daily covering the south of Sweden. Despite Klein's boosterism, the Swedish government has proposed slashing the subsidies after sustained attacks from the European Commission (EC), which recently denounced the "outdated system that distorts competition." A report from the EC said that Swedish government aid to newspapers violated "EC Treaty rules on state aid," noting that it "has a duty to prevent undue distortions of competition and trade resulting from public subsidies." As I wrote here, the Swedish Competition Authority came to a similar conclusion: "Press support has hardly fulfilled its original intent of preserving a large range of different daily newspapers in local markets…The rules governing support can complicate the establishment of new newspapers and have had a preservative effect on the newspaper market." All of these parties, who have studied the issue in some detail, are apparently missing the finer point of a government-backed network of newspapers.
Klein also argues that because the BBC is supported by a mandatory licence fee, it is therefore immune from market pressures and "need not compete on grounds of sensationalism." Obviously, I don't expect Klein to read a years worth of Swedish dailies (if he did, he would fast understand that the journalism is indeed "timid"), but has he not watched the BBC? Does he believe it all to be Andrew Marr and HardTalk? If Auntie Beeb has avoided sensationalism, as Klein claims, how does he explain the BBC's own chairman acknowledging that the programming has been significantly "dumbed down" in recent years? In 2002 Gavyn Davies confessed to The Independent, "If the accusation of dumbing down is becoming a frequent and mainstream attack from people I respect then, yes, I am worried about it." But it wasn't dumb enough to compete with private channels like ITV and satellite services like Sky, according to an internal BBC report that recommended further sensationalism and mindless reality programming. A 2008 internal review, which quizzed former employees on the state of government-run media, was scathing: "It is with sadness and some anger that they note the 'dumbing down' of programmes and the over-emphasis on celebrity led, contrived reality and lifestyle formats."
But to Klein, who insists upon holding forth on subjects with which he seems unfamiliar, the BBC is immune from market pressure simply because it receives most of its money from the government (it makes money from BBC America, DVD sales, a film company, etc). But it competes rather aggressively with, for instance, Channel 4, home to brilliant programs like Shameless, Peep Show, Dispatches, and Phoenix Nights. As BBC executives are well aware, if it's all Bill Oddie looking at birds or Simon Schama discoursing on Caravaggio, the plebs in Milton Keynes might just wonder why they pay the $231 licence fee for something they don't want.