What can we learn from how the BBC's coverage of the 2008 financial crisis and the long recession that followed?
Dr Mike Berry, a Lecturer at Cardiff
University’s School of Journalism, Media and Cultural Studies, co-wrote Bad News From Israel (2004) and More Bad News From Israel (2011) with
Professor Greg Philo.
In recent years Dr Berry has turned his attention to the BBC’s coverage of the 2008 financial crisis. I asked him about his findings and why they are important for British democracy.
Ian Sinclair: In the last few years you have published two journal articles studying the BBC’s coverage of the 2008 financial crisis – one analysing BBC Radio 4 Today programme’s output on the banking crisis in September and October 2008 and the other looking at the coverage by BBC News at Ten of the debate around the need to reduce the public deficit in the first seven months of 2009. What were the main findings of these two studies?
Mike Berry: Before answering that question directly I'd like to backtrack a little and provide some context to these events and explain why they are intimately linked. After 1979 the Conservatives introduced policies which fundamentally changed the nature and composition of the British economy. The withdrawal of the state from intervention in industry, the lifting of exchange controls and the deregulation of finance strengthened the power of capital at the expense of labour. The effects of what the Oxford historian Andrew Glyn described as, 'Capitalism Unleashed', was a shift towards an economy dominated by the service sector, a dramatic polarization in regional economic activity and sharp rise in income and wealth inequality. However this rise in inequality had a deflationary impact on the economy which was only compensated for by a steep rise in household debt. When New Labour came to power they largely accepted the Thatcherite settlement – the FIRE (Finance, Insurance, Real Estate) sector would continue to be the principal private motor of the economy whilst manufacturing was allowed to continue its long decline. However Labour did introduce record increases in social spending in areas such as health and education which in large part were paid for by tax receipts drawn from the City and the property boom. This meant that public spending increasingly took on the role of an 'undisclosed regional policy' by boosting state and para-state employment in areas outside the South-East where private sector job creation was 'weak or failing'. However this unbalanced growth model, based on asset price inflation and ever expanding household debt financed by an outsized, reckless financial services sector was unsustainable and exploded spectacularly in 2008.
This is the point at which my research picked up the story and I was interested primarily in how the crisis was explained, how the bank rescue plans were discussed and the range of debate on how the finance sector could be reformed. Would the key role of the banks in creating such an unbalanced economic model be unpacked and would there be any voices featured who called for more democratic control of finance and restrictions on the free market? When I looked at the coverage on the Today programme it was clear that the people who had caused the crisis – the bankers and the politicians – were overwhelmingly the voices charged with defining the problem and putting forward solutions. This meant that that on the question of what to do with the banks there was strong support for the government bailouts and the idea that the banks should be re-privatised as soon as possible. It also meant that arguments in favour of long term public stake in banking which could be used to support long term productive investment – rather than real estate speculation – never appeared in coverage. In a similar vein, major reforms such as heavier regulation of the shadow banking sector, the introduction of a financial transaction tax, the regulation or even banning of certain derivative classes, a clampdown on tax havens or restrictions on the revolving door between politicians, regulators and major banks, were also invisible. It was remarkable that in the midst of the worst financial crisis since the Great Depression, which was precipitated by extraordinarily irresponsible behaviour by the banks, the Today programme featured a variety of City sources warning about the dangers of too much regulation.
The banking crisis led to a major recession which shrunk the tax base and sharply increased the public deficit (the gap between the tax take and public spending). It also precipitated a major debate about how to respond to the increase in public debt. At the heart of these debates were three interlinked questions: How serious a problems was the deficit? How quickly should it be eliminated? and how should it be reduced? Some leading economists were sceptical that the deficit represented an economy emergency and believed that deficit reduction needed to wait until the recovery was well established. There were also many voices calling for the burden of deficit reduction to be primarily borne by those who had most benefitted from the sharp increases in asset wealth seen over the previous thirty years. However these voices didn't appear in coverage. Instead the dominant perspectives in BBC News at Ten reporting were that the deficit was highly dangerous and needed to be dealt with quickly by sharp cuts to public spending and increases in regressive forms of taxation. These perspectives were mostly expressed by politicians, think tanks and City sources but on occasion they were directly endorsed by leading journalists. So, for instance on 10 June 2009 a reporter commented that ‘What will be cut, by how much and when? As the government’s coffers grow ever more empty, those are questions that can no longer be avoided.'
IS: Is this coverage a step change in the BBC’s coverage of finance and economics news, or is it a continuation of previous output?
MB: In many ways this is a continuation of previous output. There is a long history of research stretching back to the mid 1970s which has found that BBC economic news tends to reproduce free market perspectives on the economy whilst marginalising left wing views.
For instance research on BBC reporting of Britain's industrial malaise in the 1970s tended to blame industrial action by trade unions whilst sidelining the culpability of management and very low levels of investment in plant and capital, which meant that the average Japanese car production worker was using equipment worth ten times that of their British counterpart. In the 1980s, research noted that BBC reporting of the Conservatives' privatisation of state assets was heavily influenced by the governments' PR campaigns with the consequence that most coverage focused on the potential profits to shareholders while excluding those who argued that 80% of the population would no longer have a stake in the newly private industries.
However, there are two key trends since the 1980s that have narrowed the range of opinion even further. The first was the decision by the Labour party to abandon contestation of economic policy following a series of election defeats in the 1980s. By the time New Labour was elected in 1997 the party had wholeheartedly embraced neoliberalism and the primacy of finance sector in the economy. Since the BBC tends to reproduce the spectrum of opinion at Westminster it meant that the major voice which had traditionally argued for an interventionist state and controls on the free market disappeared from coverage. The second factor was changes in the sociology of journalism. The 1980s saw the disappearance of the industrial news beat which had provided a platform for the views of the trade unions and a space where left-wing collectivist opinion could be articulated. At the same time financial and City news became a much more prominent feature of BBC reporting which provided much greater space for City experts and their apparently neutral opinions on the latest financial and economic news stories.
IS: How does the BBC’s coverage of the financial crisis compare to that of other British news organisations?
MB: The BBC, due to its statutory duty to maintain impartiality, doesn't employ the kind of aggressive editorialising that you see in parts of the national press. Nevertheless the range of opinion is similar.
So during the banking crisis both the Today programme and most national newspapers overwhelmingly viewed the part-nationalisation as the only option and featured commentators who argued against full nationalisation and public ownership of banks. In a similar vein both Today and the national press – with the notable exception of the Guardian – featured little information about serious structural reforms to the finance sector. If anything Today coverage, due to its exceptionally heavy reliance on City sources, tended to feature less criticism of the finance sector and more arguments against further regulation than any national newspaper.
In a similar vein, when I looked at the coverage of the debates around the public deficit what was remarkable was the degree of similarity in broadcast and press coverage with the key differences being in tone and tenor. So both the press and the BBC tended to treat the deficit as an economic crisis which threatened serious consequences such as currency depreciation, interest rate rises, bond strikes and even national bankruptcy whilst sidelining voices who questioned these claims. Similarly both the BBC and the right-wing press overwhelming presented sharp cuts to public spending and increases in regressive taxation as the only possible solutions to the 'crisis'. The argument made by some on the left that some of the burden should be borne by the most wealthy just doesn't appear in BBC coverage and even in the left of centre press it is largely absent except for the Guardian.
IS: The BBC prides itself on the principle of impartiality, and is even seen as left-wing by many commentators. Why, then, were the parameters of the coverage of the financial crisis on two of the BBC’s flagship programmes so narrow and City-friendly, and so dominated by elite, often City-based sources?
MB: If you ask journalists this question they will tell you that in comparison to academic economists City sources are invariably 'available' and 'up to date' on the latest events. Journalists also argue that you can rely on such sources to give clear concise arguments within the constraints of a brief news item and that they are the sources with the expertise needed to understand the intricacies and complexities of the financial crisis. All those are valid explanations but I think these sourcing patterns also reflect the fact that journalists internalise strong assumptions about who is qualified to speak on the economy or finance sector and this usually means a front bench politician, specific think tanks or a City source. These voices are then routinely over accessed and serve to sharply delineate the boundaries of what is said about how the economy can be managed. But of course there are always alternative sources who could be accessed to broaden the parameters of debate.
IS: Why are your findings about the BBC’s coverage of the financial crisis important?
MB: Broadcast news remains a key information source for most citizens and so what appears has significant implications for the construction of public belief and attitudes. In my research in addition to analysing the content of media broadcasts I also run focus groups with members of the public in order to examine how news accounts impact on what people think and believe. What was clear from the focus groups was that most people were quite confused about key aspects of the financial crisis – for instance what a derivative was or the difference between the public debt and deficit. However what they had picked up tended to be very heavily influenced by what they had seen in the press or broadcasting. So most people knew about the 'fat cats' and the bonuses but nobody I spoke to had heard of the financial transactions tax or knew about the 'revolving door'. When I asked people about how the public deficit could be reduced they overwhelmingly pointed to solutions they had picked up from press and television accounts such as reductions in quangos, public sector pension provision, benefit payments or immigrants. Nobody mentioned clamping down on tax avoidance or introducing progressive wealth or income taxes. However when I brought these up as potential solutions in focus groups they were received very well, reflecting the findings of large scale surveys in this area.
The press and television thus plays a key
role in framing how we understand the economy and the range of possibilities as
to how it can be managed. If the great bulk of the press argue that the public
deficit represents a national emergency which can only be solved by cuts to a
'bloated' and 'inefficient' public sector – and crucially if such views are
reinforced (in rather more temperate language) in public broadcasting then it
is hardly surprising that such views become widely accepted amongst the
IS: What changes do you think the BBC should make to provide a wider selection of voices and a broader debate when it comes to financial and economic news?
MB: I think that the first thing that needs to happen is for the BBC to recognise that its economic reporting should be more balanced. On the day that the bank bailouts were finalised (13 October 2008) the discussion during one news segment was conducted between Sir George Cox, described by a BBC journalist as ‘someone with a liberal, free-market economic background, Institute of Directors and from perhaps the more right end of British politics’, and Patrick Minford who was introduced as ‘one of Mrs Thatcher’s chief economist supporters’. Such a narrow range of reporting was not uncommon and appears to reflect a belief within BBC economic reporting that, as Mrs Thatcher famously put it, 'there is no alternative' to the free market.
However, when even economists at the IMF, the organisation mostly closely associated with the promotion of neoliberalism, are now publishing papers explicitly linking the decline in labour bargaining power with debt increases, financialisation and economic crises then surely it is time for BBC reporting to widen the spectrum of opinion it features in its new programmes.
There are many alternative sources that the BBC could turn to to provide an alternative to free market perspectives. Individual sources such as Ha Joon Chang, Geoff Tily, Simon Wren-Lewis, James Meadway, Ann Pettifor, Mariana Mazzucato, Mark Blyth or Graham Turner could offer fresh perspectives. Institutionally the BBC could source from thinktanks like the New Economics Foundation, the Tax Justice Network, PRIME or from academics connected to the Manchester Business School or SPERI. Occasionally such sources do appear, but to provide true balance they need to be featured routinely as a counterpoint to the views of City economists who tend to dominate reporting.