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Financial Journalism: Ethics and Responsibility in a Time of Crisis

Fri, 19 Aug 2011 05:14:00 GMT

Financial journalism in a time of crisis (I would imagine) is quite a different animal from the regular day-to-day reporting of markets and movements. As the markets dive yet again, and we all get another slew of news stories through twitter, tension-filled live market reports, and commentary from just about every qualified (or unqualified) source imaginable, the question of reporting standards and their contribution to market forces is definitely something we should all be thinking about.

Journalists are certainly not to blame for the current crisis, but financial journalism itself faces numerous challenges both ethical and practical, from the pressure of 24 hour news cycles, to increasing complexity in the marketplace; from commercial PR strategies to issues of sustainability and globalisation.

Many of these questions were addressed in this fascinating report produced in 2008 by Damian Tambini at the London School of Economics Polis, department of Media and Communication, and I figure it's worth hauling it out of the (virtual) cupboard for another look.

A Crisis for Financial Journalism?

The current crisis in global banking, markets and economies has reminded us all of the importance of financial and business journalism. It has also raised a set of profound questions as to the quality of that form of reporting. Why didn’t we know this was coming? Did the journalists fail to put the financial system under proper scrutiny?

Are they equipped to deal with the continuing complex story? Is this representative of a wider problem with the news media? This pamphlet seeks to address some of those questions. Research for this report began before the Northern Rock scandal. It is not a knee-jerk response. It attempts to set out a framework for a critical analysis of financial journalism. Therefore, we believe it is a useful tool for addressing the present debate about the coverage of the developing crisis. We invite you to contribute to the events and research that we have planned to follow up on this initial outline of the debate.

It is an academic project but it is ultimately targeted at journalists, financiers, policy-makers and the public. It is far too early to draw any firm conclusions about the way that the last year of economic and financial turmoil has been communicated to the public. It is vital, however, to begin addressing the questions raised. It is also essential to do so with a set of analytical frameworks that allows for balanced, considered and objective insights. This is what this initial paper by Dr Tambini seeks to do.

The current global financial and economic crisis is the not the fault of journalism. For once, we can’t blame the news media for creating this mess or for the cost of clearing it up. However, it does make us ask about the ability of journalism to report upon financial affairs in a way that lets the public know what is really going on. In that sense, the limits of financial journalism may have contributed to the present disaster.

Even before the current crisis, financial journalism was subject to unprecedented circumstances. Economic and business stories now move at a digitally driven speed that does not allow as much time for comprehension, let alone reflection. Much of the movement of financial data is automatic and unmediated by journalism. The Big Bang of the 1980s in the City coincided with the beginnings of cable and satellite TV and digitalised news gathering creating a 24/7 live reporting environment. The financial facts and systems are themselves much more complex. This is partly a function of new financial structures such as Hedge Funds and Derivatives but also because of the increasingly interconnected and globalised nature of markets. There are also the pressures of commercial interest. Public relations is spreading throughout all news but it is particularly powerful and prevalent in financial business.

Then there are the ethical challenges for journalists who have access to information and an ability to either influence markets or gain personally. Financial journalism has not been immune from the pressure on resources. The key resource is time. Time to get context, diverse views, and context and background facts. New technologies have made journalism more efficient but the business model for mainstream media is under strain. So the temptation for hard-pressed editorial management has been to spread those resources more thinly and prioritise productivity over quality.

Then there is the competition and complexity added by New Media financial journalism. The websites, blogs and forums offer extraordinary variety and, perhaps, greater openness. They provide information sources that simply did not exist before. But they also change the terms of journalistic trade. Polis believes that a more networked journalism which opens up mainstream news to greater public participation is fundamentally an inevitable and desirable trend. However, in the context of financial journalism it raises particular problems of trust, influence and accountability. The larger issue is whether journalists are now sufficiently capable of independent thought and critical judgment. The present crisis is a painful test. All journalism is subject to groupthink. It could be argued that the financial markets themselves are prey to this. Indeed, that there are incentives for financiers that positively promote a herd mentality. The accusation against financial journalism is that it simply follows those crowds. There were individual journalists who warned the world about aspects of the current crisis. Although, I cannot name a single economist or journalist who actually predicted what has happened in its totality. So the question is whether the failure to listen to critical voices and explore their critiques was a failing of journalism? Perhaps it is simply an expression of the limits of the news media. How can you expect journalists to be so brave, independent, fearless and intelligent when most of the people running our banks and treasuries appear to have ignored the warnings as well?

Polis believes that it is pointless to play a blame game. However, we do think that there is a valid case to be made that, as societies, we have neglected the value of critical financial journalism. We believe that the time is right for a new compact between financial journalism and society. It is time for a much more serious analysis of the effects of new market systems, of new media and the state of financial journalism. This report was first conceived two years ago. It is an attempt to frame the underlying issues for financial journalism and to scope out a major research project. Now it has been thrust to the forefront of a debate about financial as well as journalistic responsibilities. We hope that it forms a good first step in that debate and we call on financial and media institutions, governments and civil society organisations to take the arguments forward. The world desperately needs good financial journalism. We need to understand the practical, ethical and editorial problems that can prevent it. Polis believes that the current crisis combined with other radical changes in the news media, present us with an historic opportunity to address this need.

Charlie Beckett
Director, Polis
November 2008

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