Common Cents & More of the Same on January 22, 2021

If you have read this newsletter  in the past, you might be familiar with what I am about to write: “politicians get too much credit for the good times, and too much blame for the bad.” This has been a core belief of mine, especially when discussing any one individual politician. After all, there are literally hundreds of decision makers in Washington and thousands across these United States. To be sure, one person might be the architect of this or that initiative; however, they still have to convince others their idea is a good one.

At least, that it was I have long believed, and still believe. Perhaps I am horribly naïve. Maybe the world has passed me by the side of the road, and it probably has.

I have also long thought the fundamental differences between our two political parties were relatively minor outside of a couple of major, non-economic issues. Make tweak here and a tweak there to some policy, call the other side misguided, and then meet up later in the Senate or House Members’ dining rooms for navy bean soup. After all, there HAD to be more comradery than met the eye, had to be.

Maybe all of this has changed, although I hope it hasn’t.

The reason why I say this is pretty simple: while people tend to remember the past how they see fit, I can’t recall a time when the two major US political parties were as divergent as they seem today. Doing what I do for a living, how I put food on the table and a roof over my head, I tend to view the world through an ‘economic lens’ professionally. What is the economic impact of this or that policy? How will thus & so affect revenue and corporate profitability? Are the short-term costs to the investment portfolio worth the long-term benefits to the economy? Is it a wise investment? I think you get the picture. However, that doesn’t mean I am for unbridled avarice and materialism, far from it. Those things have a detrimental impact on both society and longer-term economic health.

While people don’t usually quote him, and many in our younger generations have probably never heard of him, President Calvin Coolidge did an excellent summation of the desired relationship between the press, the economy, and society in a speech to the American Society of Newspaper Editors in January 1925 entitled: “The Press Under a Free Government.” Here are some pertinent excerpts, and many of you might notice some individual quotes/lines in the body:

 

“There does not seem to be cause for alarm in the dual relationship of the press to the public, whereby it is on one side a purveyor of information and opinion and on the other side a purely business enterprise. Rather, it is probable that a press which maintains an intimate touch with the business currents of the nation, is likely to be more reliable than it would be if it were a stranger to these influences. After all, the chief business of the American people is business [emphasis added]. They are profoundly concerned with producing, buying, selling, investing, and prospering in the world. I am strongly of the opinion that the great majority of people will always find these are moving impulses of our life…

It is only those who do not understand our people, who believe our national life is entirely absorbed by material motives. We make no concealment of the fact that we want wealth, but there are many other things we want much more. We want peace and honor, and that charity which is so strong an element of all civilization. The chief ideal of the American people is idealism. I cannot repeat too often that America is a nation of idealists. That is the only motive to which they ever give any strong and lasting reaction. No newspaper can be a success which fails to appeal to that element of our national life. It is in this direction that the public press can lend its strongest support to our Government. I could not truly criticize the vast importance of the counting room, but my ultimate faith I would place in the high idealism of the editorial room of American newspapers.”

 

While ‘Silent Cal’ made these comments almost 100 ago, I feel as though they still hold true today, at least the underlying message. As an aside, I would remiss if I didn’t point out academic historians largely consider Coolidge an average to below-average President due to his lack of a sweeping agenda and charisma, his small-government tendencies, as well as the Great Depression which followed his tenure. That being said, few have doubted his personal integrity.

With that said, I find his underlying message in these two paragraphs compelling: the innate idealism in American culture (yes) fosters economic development, and it is in the media’s best interest to foster this idealism. In other words, American idealism, economic development, and the free press are inextricably, and virtuously, intertwined. That which promotes one promotes them all. As such, it would seem a press/media which promoted common ground would ultimately be ideal to, again, promote American idealism and, therefore, economic growth.

Put another way: US idealism and economic growth are maximized when society is on the ‘same page’ and moving in the same direction. The media is indispensable in ensuring this.

Unfortunately, I would argue, this is far from the case today. Thanks to changes in technology, Americans have access to a nearly infinite number of media outlets. They can choose from a host of different providers, topics, and viewpoints. They are no longer limited to the local newspaper(s) and the nightly news on the primary networks. Americans now have access to a virtual buffet of information. This is a problem, believe it or not.

Media outlets charge advertisers based on circulation, subscribers, unique downloads, clicks, likes, shares, mentions, tweets, retweets, message board usage, etc. Ever wonder why the local newspaper’s website is almost completely devoted to things like new restaurant openings, entertainment, and sports? Because that’s what people tend to read and comment upon. So, the newspaper is just giving the people what they want; it doesn’t matter if it is candy floss. It pays. So, there is no economic downside to providing more of it. Stories about Girl Scout cookie sales and the CYO raffle?

What of the national media? It is no surprise you sell more umbrellas when it rains, or so the adage goes. What do you imagine gets the most clicks, likes, shares, mentions, tweets, and retweets? A ‘straight down-the-middle’ opinion piece or something a little more contentious, salacious, or what have you? You know the answer. This is why our news outlets have become so opinionated. Divisiveness generates user activity on their websites. As such, it promotes ad sales and revenue growth, end of discussion.

Why is Fox conservative? Because CNN isn’t. Please note, I could have asked the question thus: why is CNN liberal? Because Fox isn’t. One couldn’t exist without the other, as both are ‘taking’ the other’s castoffs. So, the more extreme one is, the other will be equally so…there is plenty of money to be had for both. Essentially, there is no compelling economic argument for the mainstream national media to be politically agnostic. The money isn’t there to be so.

This is in sharp contrast with the role of the media in the past. Previously, it was heavily reliant on local, corporate advertisers. There simply weren’t the same number of NATIONAL or global options. Therefore, it wasn’t in the media’s best interest to foment discord, to be as extreme as it is now. To do so would have been economically foolish. As such, while an individual outlet might have had a bias, the media played more towards the middle than it does now…in aggregate.

So, in going back to Coolidge’s contention(s), what happens to US economic activity if the media doesn’t actively promote American idealism? One step further: what happens to American idealism and, as a result, exceptionalism, if the media cultivates division and stifles meaningful discourse? Advances disunity and furthers resentment? Of course, if that is what pays the bills, news organizations will give us all we want. Seeing this, politicians will assume we are more extremist than ‘we’ actually are, and govern accordingly.

As a result, we end up with a fractured society, a deterioration in our idealism, an impairment in our esprit de corps, and an interruption in economic activity because that is what we have unwittingly ‘said’ we wanted with our likes, clicks, shares, tweets, retweets, mentions, and message board activity. The more we do these things, the worse our society will fracture.

Why this topic? Frankly, because I want the acrimony to stop. Just because someone might disagree with me doesn’t make them stupid. Heck, it even might make them smart, and I would be wise to learn something from them. The same could be said all of us and all of the people we have chosen to govern us. Hey, we don’t have to search very hard to find people who hate us for being Americans. So, why are fighting each other when the real enemy is elsewhere?

Why this week? The reason is simple: because despite the change in Administration, nothing much else seems to have changed. The media is still fostering discord, because it pays the bills, and Americans are still yelling at each other. I, and I imagine WE, had been hoping for better.

In the end, this bickering and division will ultimately have a negative impact on economic activity and, therefore, American idealism and exceptionalism. If anyone can explain to me why that is a good thing, I would love to hear it. In the meantime, let’s hope our elected officials will wise up and not do anything which will help them actually deserve the credit for the bad times.

Take care, have a great weekend, and, yes, this was cathartic.

John Norris

Chief Economist

 

PS…Local news organizations are far more prone to be balanced in their approach

 

 

 

 

As always, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as those of our investment committee, are subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the reset of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.