Things I Wish I Said
Unemployment benefits and the deflationary trap
Krugman &co keep warning about the deflationary trap. Basically, the problem of having falling real wages and prices, which then tend to get baked into business and personal planning, creating a very hard circumstance to avoid. How can good unemployment help this? By making workers not mind as much going without jobs rather than staying, and making businesses less reluctant to do layoffs. Paradoxically, if businesses ask workers to stay on and accept pay cuts, this can feed into a deflationary spiral. The model is that since the cost of labor goes down, firms can cut the cost of their goods to capture the reduced consumption. Consumption is reduced because workers expect their wages to go down. Thus the deflationary trap. ¶ 10:36 PM 0 Comments
Friday, January 30, 2009
As we wrestle with what to do about the financial crisis, I find myself convinced that better/smarter unemployment benefits are a key part of it. There is plenty of talk about how people who are unemployed are good targets for stimulus because they'll spend, and about how they'll benefit from the jobs created by infrastructure development projects. Here's another angle.
Krugman &co keep warning about the deflationary trap. Basically, the problem of having falling real wages and prices, which then tend to get baked into business and personal planning, creating a very hard circumstance to avoid. How can good unemployment help this? By making workers not mind as much going without jobs rather than staying, and making businesses less reluctant to do layoffs. Paradoxically, if businesses ask workers to stay on and accept pay cuts, this can feed into a deflationary spiral. The model is that since the cost of labor goes down, firms can cut the cost of their goods to capture the reduced consumption. Consumption is reduced because workers expect their wages to go down. Thus the deflationary trap. ¶ 10:36 PM 0 Comments
The news business
The basic premise is that ad money follows the audience. The audience is now more fragmented, it is true, but audience laws still follow a power law and there will still be larger and smaller vehicles for ads. The ease of advertising online I don't think can be blamed. While it may be easier, that should allow more people to do it. It isn't clear why this makes the total market shrink.
I suspect that the ugly truth is that newspaper advertising was never as valuable as it seemed. It was just that there was no alternative. Another ugly truth is that newspapers aren't as valuable as they used to be. This is for two reasons. First of all, there are way too many. There is no reason why there are 100 microphones in front of someone at a press conference. A couple will do. The market is being asked to pay dozens of distributors to do the job of just a few. There's no dramatic regional angle why we need 20,000 similar stories on the strife in Gaza. Wouldn't 2000 do the trick? Or 200? Or perhaps 20? There is a gigantic oversupply of news. And at least the Gaza story is substantive. We need barely any coverage of the various celebrity-scandal-o-the-day type that many newspapers waste effort on.
In other words, if the market were consolidated into say a dozen or so large national newspapers, the quality of news would probably actually go up, not down, and those organizations would be able to draw the kinds of audiences to make a go of it. Local papers would be very heavily locally focused, perhaps syndicating articles, perhaps wrapping their sections with the national bits. Perhaps going free.
Oddly, I wonder whether it is in fact online entities which will end up becoming these organizations. I wonder if the newspaper business is too wedded to the past to be able to adapt, and that with perhaps a couple of exceptions, will just die out, and be replaced by expanded online news organizations with growing budgets and an appetite to become news hubs with print components to add to their electronic presences. ¶ 9:25 PM 0 Comments
Monday, January 12, 2009
The news business is in trouble. There are various theories about what's going on, but basically, it is much harder to have an ad-supported newspaper than it used to. Why? Aaron Swartz points out that it used to be hard to deliver ads to people, and now it isn't. Is this really the issue?
The basic premise is that ad money follows the audience. The audience is now more fragmented, it is true, but audience laws still follow a power law and there will still be larger and smaller vehicles for ads. The ease of advertising online I don't think can be blamed. While it may be easier, that should allow more people to do it. It isn't clear why this makes the total market shrink.
I suspect that the ugly truth is that newspaper advertising was never as valuable as it seemed. It was just that there was no alternative. Another ugly truth is that newspapers aren't as valuable as they used to be. This is for two reasons. First of all, there are way too many. There is no reason why there are 100 microphones in front of someone at a press conference. A couple will do. The market is being asked to pay dozens of distributors to do the job of just a few. There's no dramatic regional angle why we need 20,000 similar stories on the strife in Gaza. Wouldn't 2000 do the trick? Or 200? Or perhaps 20? There is a gigantic oversupply of news. And at least the Gaza story is substantive. We need barely any coverage of the various celebrity-scandal-o-the-day type that many newspapers waste effort on.
In other words, if the market were consolidated into say a dozen or so large national newspapers, the quality of news would probably actually go up, not down, and those organizations would be able to draw the kinds of audiences to make a go of it. Local papers would be very heavily locally focused, perhaps syndicating articles, perhaps wrapping their sections with the national bits. Perhaps going free.
Oddly, I wonder whether it is in fact online entities which will end up becoming these organizations. I wonder if the newspaper business is too wedded to the past to be able to adapt, and that with perhaps a couple of exceptions, will just die out, and be replaced by expanded online news organizations with growing budgets and an appetite to become news hubs with print components to add to their electronic presences. ¶ 9:25 PM 0 Comments
