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The Information Warfare Era
Dramatic changes in communication technology have transformed US politics
· The flow of information to the public undergirds government legitimacy
· American politics has evolved with the advancement of communication technologies, from the newspaper, to radio, to TV, to social media
· The disruption of the news industry business model by internet firms has resulted in a mass extinction of local newspapers and the rise of winner-take-all prestige news organizations
· America’s information environment today is characterized by dueling liberal and conservative news ecosystems
· These “Two Americas” are incompatible with our republican form of government
· To fix the news, and end the culture wars, we should allow news organizations to collectively bargain with Big Tech
· A follow-up to the failure of SVB
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During the Cold War, the US and its allies beamed Radio Free Europe into the Soviet Union. The station was US government propaganda intended to counter Soviet propaganda and erode Moscow’s grip over its citizens. When the Soviet Union dissolved in 1991, Radio Free Europe was not the cause but it helped prepare conditions for the Soviet collapse.
This example illustrates how critical information is to legitimizing a government. Information supremacy is not only applicable to democracies, in which citizens transform information into decisions at the ballot box, but for autocracies has well, which must have at least some popular support to remain in power. The US is an open system where the government mostly stays out of media and the First Amendment guarantees that anyone can say whatever they want. Given the importance of communication to politics and governing, changes in communications technology have the potential to transform politics. The Digital Revolution is having just such an effect on US and global politics today.
History of Information Technology in Politics
The essence of politics is telling a “story” and getting as many people as possible to buy into that “story”. The medium for telling stories has changed over time as technology has changed. In America, newspapers historically shared one parties story, often denoted in their name by adding “-Democrat” or “-Republican”. Descendants today include the “The Natchez Democrat” of Natchez, Mississippi and “The Republican” of Springfield, Massachusetts. These broadsheets used to share the political story of the party in their name.
The rise of the medium of radio was another technology harnessed by American political parties. Franklin Delano Roosevelt, elected four times as US President, was particularly adept at leveraging this medium with his “fireside chats”. The 1960 debate between Richard Nixon and John F. Kennedy introduced the nation to television. Those who listened to the debate on the radio thought Nixon won, while those watching on TV thought JFK won. More recently, Donald Trump won the 2016 US Presidential election by using the new social media technology Twitter.
The Death of the Newspaper
The original business model for newspapers was to sell advertising. This source of revenue subsidized the news reporting business. Then in the 1990s and 2000s new giant internet businesses emerged, which were far more effective at advertising. Advertisers switched their ads from print to digital and newspapers died in mass. From 2005 to 2021, about 2,200 American local print newspapers closed.[i]
Figure 1: Newspaper revenue has been decimated by Big Tech
The disruption to the newspaper business model wasn’t fatal for all newspapers. Major newspapers, such as the New York Times, switched their model to an online subscription model and have grown considerably.
Figure 2: Subscription growth at the NYT
But there was a problem: the incentives for running a subscription model cause the editor to give the audience what it wants, not necessarily objective reporting. Subscribers don’t like reading news they don’t agree with or runs counter to their worldview. 91% of New York Times readers identify as “Democrat”, according to the Pew Research Center[ii]. This has created the incentive to publish partisan content, which opponents often label “fake news”.
This phenomenon is in no way limited to the political Left. Fox News pioneered the demographic-based subscription business model on the Right with great commercial success starting in the 1990s.
Figure 3: The rise of Fox News
Information Warfare Era
Today’s information environment in America is characterized by dueling liberal and conservative news ecosystems. To survive, all major corporate newspapers and cable networks have moved to this model. The sorting of Americans into each bubble has been exacerbated by algorithms and social media echo chambers. Don’t like an opinion? Just block or unfollow it. Americans are beginning to catch onto this, with trust in national news organizations declining across all age groups while younger adults trust information from social media almost as much as from national news outlets.
Figure 4: Trust in news by age group[iii]
In college, I took an English class on Science Fiction. We learned that the definition of science fiction is “to imagine how a society reacts to a technological innovation”. Think of warp speed in Star Trek or the bioengineered replicants in Blade Runner. In dystopian 2020s America, that technological innovation is the information bubbles we inhabit.
There are Two Americas, one Democratic and one Republican, each with their own facts and worldviews. Increasingly, dialogue and empathy between the groups are limited. Hatred between the two groups is on the rise. Voters are increasingly set in their political views and refuse to budge.
Figure 5: The hardening of American political views
Benjamin Franklin is said to have once responded to an inquiry about the model of American government after the Constitution was drafted. “What type of government will we have, a monarchy or republic?” a citizen asked. “A Republic, if you can keep it” he responded. The Two Americas are a threat to that Republic.
To End the Culture Wars, Fix News
In American Opportunity, Ad Astra introduced a 5-point plan to reignite the American Dream. As a refresher, here is that plan:
Fixing the news falls under 3. End the culture wars (political polarization). News organizations are currently incentivized to promote sensational content. Organizations present the news through a partisan lens, Democratic to some audiences and Republican to other audiences. Notable recent examples include the trial of Kyle Rittenhouse and the urban unrest in the summer of 2020. News is often presented in a way that makes it unfathomable to empathize with the opposing groups perspective, even though most people are reasonable. These sensationalized events perpetuate the Culture Wars between Red and Blue America.
Figure 6: Dueling political narratives in the turbulent summer of 2020
To fix the news, their business model and relationship to Big Tech must be changed. Half of Americans report getting news from social media, while 65% get it from a search engine like Google[iv]. That means Google and Facebook are getting the advertising revenue that newspapers used to receive by displaying content from those very same newspapers. A single newspaper is powerless to negotiate advertising revenue sharing with the likes of Google or Facebook. But collectively, they have more power and can negotiate a higher revenue share (like a union of laborers). Antitrust law in the US currently prevents newspapers from collectively bargaining. That law should be changed.
In 2021, Australia passed a law allowing newspapers to collectively bargain and it has been a boon for local newspapers.
Outlets throughout Australia are hiring new reporters. The Guardian added 50 journalists, bringing their newsroom total up to 150. Journalism professors say their students are getting hired and that there are too many job vacancies to fill.[v]
Figure 7: Newspapers in Australia have had success bargaining with Big Tech[vi]
As a sidenote, multiple Australian political parties across the ideological spectrum united to pass this law.
The Fall of the Republic
Just as Radio Free Europe ate away at the foundation of the Soviet Union, our media environment erodes the foundation of the American Republic. We must change how our journalism industry functions or we risk the same eventual collapse.
Failure of SVB
As a follow up to Sunday morning’s emergency post on the failure of Silicon Valley Bank, Ad Astra readers Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell issued a joint statement Sunday evening stating that depositors in SVB would be kept whole and that the Fed would essentially backstop all uninsured deposits in regional banks across the US. On Monday, there was no banking panic and markets were placid. It was a happy ending for everyone except SVB management and stockholders, who were wiped out.
Figure 8: Federal Reserve Chairman Jerome Powell (left) and Treasury Secretary Janet Yellen (right)
But is that the end of the story? Almost certainly not.
The incident has prompted finger pointing between all major political factions and regardless of your political beliefs before the fall of SVB, this near-financial crisis confirmed them. In fact, the fallout from the rescue of SVB perfectly illustrates the information bubble framework introduced in this post.
President Biden blamed former President Trump for deregulation that precipitated this crisis.
The Republicans blame President Biden for excess spending, which caused inflation, which caused the Fed to rapidly raise interest rates and nearly blow up the financial sector.
And the populist Left and populist Right both blame the corrupt ruling class.
Here’s a typical reaction from the populist Left:
And from MAGA
Meanwhile, the liberal and conservative media ecosystems are not talking about our banking sector, which is clearly more fragile post-2008 than almost everyone thought. The information warfare era keeps us talking past one another and prevents us from solving problems.
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