I am going to outsource most of my ire at David Carr's column in the New York Times today blaming new media (uh, that would be me) for spreading bad news about the economy too quickly to my friend and colleague Scott Rosenberg, who does a fine job of demolishing the thesis today in his own blog.
But I will take a close look at one key paragraph, because there is a truth buried in there somewhere, although I don't think it's exactly the truth that Carr was trying to communicate.
Carr writes:
With unemployment, auto sales, home foreclosures and consumer confidence all benchmarking historic levels of distress, news outlets are hardly making it up. But the machinery of the economy began to freeze in place far more quickly than it has in the past, in part because so much scary data is circulating so much faster than it used to. This recession got deeper faster because we knew more bad stuff quickly.
Now, on one level, this is just silly and wrong. Many of us have been warning for years that the economy was headed for serious trouble. The recession is now dated as having begun a full year ago. The housing bust has been a slow-motion train wreck visible in full sight by anyone who was watching. There has been no shortage of voices warning that the chickens were coming home to roost, and that, at some point, a bad economy could fall off the cliff. The idea that a million econobloggers calling out attention to every new economic data point gave the economy the deadly push it needed gives us far too much credit.
I can tell you exactly when the slowing U.S. economy stopped in its tracks, and "this recession got deeper faster." It was in mid-September, when Hank Paulson and Ben Bernanke told congressional leaders that the credit crisis was entering such a severe stage that the "economy would stop" if dramatic action (i.e., the TARP bailout) wasn't taken. The critical moment came later that week, when Wall Street traders watched the first House vote on the bailout fail in real time. Unless you consider CSPAN to be new media, that was actually a pretty old media moment. Traders watched their government on TV surprise them, and they voted with their feet instantly.
Neither the credit crunch nor that mass stampede were precipitated by online chatter. But the reaction to a Republican Treasury secretary warning that the economy could "stop" combined with a 700 point drop in the Dow and clear signals from the government that our political leaders did not know what to do resulted in a predictable outcome. A great many Americans decided in mid-September that maybe it wasn't the best time to splurge on a new TV or a new car or an expensive vacation.
The ensuing massive and unprecedented decline in consumer spending has, without doubt, precipitated a much more serious stage in the ongoing financial crisis. But when the U.S. economy is losing half a million jobs of month, as I have written before, it is certainly a natural, rational reaction on the part of individuals to tighten belts and curtail spending. Our new found sense of prudence isn't a consequence of too much widely distributed babbling fear, but rather, I would argue, is rooted in a growing realization that our government has been mismanaging the economy in a profoundly irresponsible way for years or even decades.
However, there is another, deeper sense, in which David Carr is actually on to something. But it isn't the insta-news of the Internet age that's the problem. The world is different, and events do move faster than in past eras -- largely due to the way networked computer technology has created tight, yet fragile linkages between all kinds of systems all over the globe. So an earthquake in Taiwan can disrupt computer manufacturing production lines in California within a matter of hours. A currency crisis in Thailand can set off a wave of economic collapses across Asia in a matter of weeks. A downturn in housing prices in the U.S. can crush financial markets across the world in a matter of seconds. Never before have butterflies flapped their wings with the power to create hurricanes halfway across the globe with such ease and speed.
We live in a world where news travels fast -- but so does capital, so do manufactured goods, so do production lines and technological innovations. Some 6.8 billion people are linked together more closely than ever before and the dominoes that fall from every interaction are happening at the speed of light with incalculable complexity. When you look at it that way -- all of us who are busy trying to report and analyze and understand this in real time (and there are certainly more of us than ever before, with more access to information) aren't speeding up the pace of events, at all.
We're just trying frantically to keep up.
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