Jeff Zucker, meet Sir Thomas Gresham.
- By Daniel AltmanDaniel Altman is senior editor, economics at Foreign Policy and is an adjunct professor at New York University's Stern School of Business. Follow him on Twitter: @altmandaniel.
Last week, during the frantic hunt for the second suspect in the Boston Marathon bombings, CNN wrongly reported that a man had been arrested. The news network soon corrected its error, but not in time to avoid a chorus of "how could this happen?" from, mostly, other media. Their explanations centered mainly on the pressures of the 24-hour news cycle. But for the real reason, you’d have to ask Sir Thomas Gresham.
Gresham was an advisor to Queen Elizabeth I and an exceptionally wealthy London merchant. Having realized that British money was losing its value because of the shoddy coinage standards of the queen’s predecessors, Gresham suggested she create a new, more trustworthy money that could not be confused with the old specie. This act — though not the first of its kind in recorded history — gave rise to what is now known as Gresham’s Law: "Bad money drives out good."
The law makes a simple but powerful point: Why would you go to the trouble of obtaining genuine legal tender when, at a lower cost, you can get something that works just as well? Joseph Schumpeter may have explained the law best in his History of Economic Analysis, pointing out that "if coins containing metal of different value enjoy equal legal-tender power, then the ‘cheapest’ ones will be used for payment, the better ones will tend to disappear from circulation."
The same is true for the news. If bad news — in the sense of the quality of the news, not its content — is just as valuable as good news, then good news will eventually disappear from the market.
What makes news good? It’s a subjective term, but I would argue for a definition something like this: information that is accurate, presented so that the facts speak for themselves, and eventually verifiable. These are the qualities that make news useful, accessible, and trustworthy to as broad an audience as possible.
Yet good news is not the only kind of news that has value in the market. News doesn’t just provide information; it can also offer entertainment and a vicarious emotional experience. Even bad news, which is not accurate or verifiable, can supply these pleasures. The thrills of bad news may be fleeting and cheap, but they are thrills nonetheless.
These thrills were coming fast during the Boston manhunt. Each speculative bit of bad news — Was one of the bombers missing Brown University student Sunil Tripathi? What about the Saudi man who "smelled of gunpowder?" — reliably provoked a flurry of reactions in the media and the public at large. The reactions came not because each morsel of supposed news was true, but because it got our minds racing (and our fingers Googling) with the possibility that it might be true.
In fact, these reactions were pretty much the same as the ones we had to good news. In terms of the public’s enjoyment, good and bad news were roughly equivalent, just as good and bad money were indistinguishable in Gresham’s time.
By themselves, however, repetitions of this situation are not enough to make good news disappear. For that, there has to be a difference in the cost of producing good and bad news. And clearly, there is.
Good news is expensive. It requires correspondents on the scene, several layers of editors supervising their work, producers at headquarters, and the resources to underpin the communication between them. Good news is also slow. The best reporters may be able to email a story or phone it in verbatim minutes after witnessing an important event, but the process of vetting sources and checking facts still takes time.
These aspects of good news tend to be compromised when there is a lot of bad news competing for the public’s attention, and thus for the advertising dollars that keep news organizations in business. By the time good news finally becomes available, bad news may already have won the Internet. But the victory of bad news is not just a question of speed.
CNN was once seen as a source of good news, an honest broker that soberly cycled through the headlines all 24 hours of every day. But bad news networks started to creep into the market, filling television time with inexpensive talk shows that peddled rumor, sensationalism, and even outright lies. Because audiences gave bad news equal value — or even greater value — these networks could outcompete CNN, garnering the same or more revenue at lower cost. And so CNN started to give up on good news, installing its own rabble-rousing talk shows, broadcasting wall-to-wall coverage of stranded cruise ships, and placing shock value above sobriety with headlines like last week’s "WHERE IS HE HIDING?" Gresham’s Law had proven right again.
Right now, good news and bad news are both legal tender, in the sense that both can be exchanged for advertising dollars. But there is a solution. As Gresham realized in the 16th century, the way to restore the value of good money is to make it easily distinguishable from bad money. If bad money can no longer be used in most transactions, it will only exist on the fringes of the economy. For Gresham, minting a new official currency solved the problem.
Could we do the same for the news? One way to "mint" good news could be with a government mandate. Indeed, this was the upshot of the Leveson Inquiry in Britain, which resulted in the regulation of newspapers for the first time since the century of Queen Elizabeth’s death. But it’s hard to imagine something similar happening in the United States, where free speech is enshrined in the Constitution; among the strongest voices against the new British system was the editorial page of the New York Times — the epitome of a good news outlet.
An alternative would be an independent agency for certifying good news. Certification would be optional, but the public would easily be able to check whether a news outlet had the agency’s seal of approval. Certification would also have a high bar — only a few media organizations might obtain it at first — and errors like CNN’s would put certification in jeopardy. For sources with no seal of approval, audiences would at least think twice before believing what they saw, read, or heard.
It’s by no means a perfect solution, especially as it might be open to political influence. Moreover, sophisticated news consumers are already rightly skeptical of the flood of information that courses daily through the Internet. But to the extent that bad news has put good news in danger of extinction, an application of Gresham’s Law might finally offer a chance to turn the tables.