UPDATED
In 1791, James Madison penned a short essay that foretold a long, and ongoing, financial involvement by government in journalism. Madison said, in part:
Whatever facilitates a general intercourse of sentiments, as good roads, domestic commerce, a free press, and particularly a circulation of newspapers through the entire body of the people, and Representatives going from, and returning among every part of them, is equivalent to a contraction of territorial limits, and is favorable to liberty, where these may be too extensive.
The following year, partly in response to Madison’s advice, Congress passed the Post Office Act of 1792. One of key provisions — in what, looking back, is a pivotal development of a robust and free press in America — let newspaper publishers mail papers for extremely low prices. It was an outright subsidy, for a social purpose.
The goal wasn’t to give newspaper owners a special deal because they were nice people (many were not) or would support government positions (many did not). It was to ensure that knowledge would spread as quickly, and as widely, as possible. The First Amendment forbade interference in what people could publish; the Post Office law provision helped make it financially feasible to ensure that other people could receive and read what was published.
By all historical accounts, the 1792 law worked. It was central to the rise of the nation as a society based on knowledge.
More than two centuries later, as the newspaper business falls on hard times that may be terminal, we’re hearing some calls for a taxpayer bailout of the industry, on the grounds that their journalism plays such a vital role in society that taxpayers should subsidize it directly. Today, a member of Congress described at a conference his proposed legislation that would exempt newspapers from income taxes in certain circumstances.
I’m against direct subsidies. They are poisonous, especially so if they are designed to prop up a business that is failing in part because it was so transcendentally greedy in its monopoly era that it passed on every opportunity to survive against real financial competition. In my view, the newspaper industry deserves to die at this point.
I’m not against intervention at a more basic level, as I’ll discuss below — namely, a build-out of fiber optic lines to every home and business in America so that everyone can compete freely in a true marketplace of knowledge.
But as people decry or laugh off a bailout of newspapers, as the New York Times’ David Carr did yesterday in his column, they should remember that government has never entirely lacked financial influence — and it doesn’t lack it now — over the journalism business.
Governments play major roles in the success or failure of all kinds of business. How corporations do business, and which ones pay which taxes, are decided by lawmakers. But journalism organizations have enjoyed their share of special treatment — and we should be glad, based on our nation’s early history, that they did.
Intervening via the mail, as noted above, was the linchpin. A few decades after the Post Office Act of 1792, Alexis De Tocqueville traveled around the states to research his pathbreaking volumes on Democracy in America. He observed how widely knowledge had spread in a largely rural nation. The essential instrument of this, he explained: “The post, that great instrument of intellectual intercourse, now reaches into the backwoods.”
By the mid-1800s, says Bruce Bimber in his book, Information and American Democracy , our postal system became the most dependable and comprehensive in the world. It was an unprecedented exercise in governmental assistance, Bimber argues — “a kind of Manhattan project of communication” that helped fuel the rise of the first truly mass medium.
Support for media has been a long-running thread. Even in the 20th Century, favorable mail rates helped countless magazines and newsletters stay solvent (or better). The rise of the Time Inc. magazine empire was aided immeasurably by the fact that it could mail its publications at a cost to the publisher that barely began to cover the actual cost to the system. (In the 21st Century, Time’s maneuvering to ensure its own favorable rates, at the expense of publishers of smaller journals, made some economic sense but also had a odiously anticompetitive aspect.)
Newspapers have enjoyed other special federal and local advantages, meanwhile. One of the most flagrant special-interest favors in U.S. history has to be the Newspaper Preservation Act of 1970, in which newspaper publishers got Congress and the Nixon administration to give the industry an exemption from antitrust laws. (I spent more than a decade at a company that was helped by this law.)
In many states, newspapers get special tax treatment, notably exemption from sales taxes. The state of Washington, for example, just cut newspapers’ main business taxes by 40 percent (to the same rate enjoyed by Boeing and timber companies, the state’s most powerful industries).
Print publications haven’t been the only beneficiaries of government favors. The gifts to the newspaper and magazine businesses are dwarfed by what broadcasters carved away from the taxpayers: namely free use of the public’s airwaves. Local TV broadcasters, in particular, took advantage of this windfall, worth hundreds of billions of dollars over the decades, to make money at a rate that made even newspaper shareholders envious. (And local TV “news” has been, for the most part, a cesspool of violence, celebrity gossip and trivia that would have to improve to be mediocre; newspapers are only now becoming as lousy as local TV news has been through its entire history.)
I’ve only cited a few of the ways the nation’s governments have been doing financial favors for the journalism business. Consider newspaper racks on your community’s sidewalks; they’re a subsidy in their own right, because not everyone can put a rack there. I could list many other special favors, but you get the idea.
The key point, again, is that calls for a federal bailout don’t come in the context of hands-off treatment in the past — even though I personally find the direct subsidy idea abhorrent for all kinds of reasons, not least the way current proposals would protect enterprises that manifestly don’t deserve it and the near certainty that such a bailout would lead to more direct government interference in the journalism itself.
What could government do? The 1792 Post Office Act had a noble outcome, and is instructive for today. So is a more recent federal endeavor: the Interstate highway system.
In the 1950s, America’s state and local highways were relatively well developed. What the nation decided it needed, and what corporate America couldn’t begin to provide, was a robust system of long-distance roads.
With data, the reverse is true: the long-distance data highways, the “backbone” networks, exist in abundance. What we really need now is better local conveyances, the ones running to and into our homes. Big telecom carriers say they’ll provide these connections — that is, they may provide these connections if they feel like it — only if we allow them to control the content that flows on those lines.
Imagine if we’d given the interstates to corporations that could decide what kinds of vehicular traffic could use them. If you want to worry about a threat to the journalism of tomorrow, consider the power being collected by the so-called “broadband” providers right now.
If we’re going to spend taxpayers’ money in ways that could help journalism, let’s build out the data networks, by installing fiber everywhere we can possibly put it. Let private and public enterprises light it up, and let that market thrive — a market of ideas and business models based on the same principle America stood on in its early days, namely widespread access to knowledge. I’d be delighted to see my tax dollars used for that purpose, and I’m betting most other people would, too.
(Photo of postmaster instructions via the Smithsonian Institution)
