Media played little role in inflating property bubble
The Oireachtas banking inquiry needs to consider carefully the evidence of 'expert' witnesses
The economics community is far more culpable than the media in failing to see the crash coming and, in particular, in failing to see the risks in the banking sector. I say that as someone who was working as an analyst of European economies during the bubble and is now a columnist in the media.
I did not see the size of the risks building up in the financial sector in Ireland and across the western world before 2008. I accept this was a failing and do not seek to distract from my culpability.
That should be said after a week during which swathes of the media were asked to account for their actions during the bubble by the people they hold to account. The Oireachtas Banking Inquiry questioned at length a number of journalists and people in management positions in the media during the bubble. The objective was to assess the role of the media in the creation of that bubble.
In hindsight, the media should have asked more questions about the build-up of credit. It should have given less prominence to economists from organisations with a vested interest in the property market but who were allowed to comment as if they were independent experts. The haranguing of some naysayers in some cases remains a serious blemish. And the ongoing practice of having journalists work as property editors who then suspend normal journalistic balance when writing about properties is not, in my view, a good idea.
But whatever the failings of the media, the notion that it is to blame in any significant way for the bubble simply does not stack up.
The charge that media people failed in their scrutinising duty suggests that they understood what was happening, and the risks involved, but ignored them. As some of the former editors who appeared before the inquiry asked, if most experts - including outsides ones like the IMF - failed to see the risk, how could non-expert reporters?
Journalists are generalists. In an increasingly complex world, it is becoming increasingly difficult for generalists to ask the right questions of people who are more and more specialised in their own fields. This problem is compounded by shrinking revenues in many media organisations as technological change transforms the sector.
Another charge is that the media was wrong to run so many property ads and that the revenue coming from property meant that media organisations allowed themselves to be influenced in their coverage by representatives of the sector.
All the media people who appeared before the inquiry said that clear lines existed between the commercial and editorial sides of their organisations and that the monies received from advertising did not affect their coverage of issues. Either some or all of those people lied to the committee last week or the firewalls within media organisations did not fail during the bubble.
As for the criticism about the running of property ads at all, it is little short of bizarre. The selling of homes is legal. If those who sell a legal product offer to pay a commercial organisation to advertise that product, there would need to be a very good reason to refuse that revenue.
So what of inquiry itself? While it is a very good idea that parliament conduct an investigation into the matter, the idea that journalists appear before it is wrong in principle. In democracies, journalists are very rarely brought before parliamentary investigations because of the implications for press freedoms. While the media should be accountable, that role should not be for politicians - whose holding to account is the primary role of the media.
Opening the session on the media was Dr Julien Mercille, an academic geographer who specialises in media studies (and American foreign policy). He was at the inquiry to give expert opinion on the media.
Dr Mercille is a man of the hard left. In his hard-left worldview, capitalism is dominated by interconnected elites, who are in the minority, but because they wield all the power they are able to keep the majority poor and suppressed. All of those in the 'elite' are involved in the perpetuation of systematic unfairness in society; some do so deliberately and some are mere dupes, too foolish or to unquestioning to know what they are doing.
All media organisations of any size in Ireland are part of this elite, according to Dr Mercille. "Both private and State-owned media organisations largely convey corporate and political establishment views," he told the inquiry last week, going on to say that "because the housing boom was beneficial to key sectors of the Irish corporate and political establishment, it was never seriously challenged".
It is hard to think of any sector of society better equipped and better placed than academia to scrutinise the media. More academic analysis of the media would be a good thing, as it would help the media examine itself and see where it could do things better.
But as Dr Mercille is playing a role in the inquiry, it is right and proper that his work is also scrutinised, and that is all the more so because there are serious questions about it.
Last year I was invited to debate the role of the media with Dr Mercille at a conference. In preparation for the event, I read his work carefully. His claims about the failings of the media during the bubble period are based on articles which appeared in this newspaper, the Irish Independent, the Irish Times, and episodes of RTE's Prime Time. He claims that when this output is analysed it shows a highly unbalanced picture of cheerleading for the boom and only a tiny amount of time and space given to dissenters.
Interested in analysing his evidence, I contacted Dr Mercille and asked him to share the database he had collated. It turned out that he had not gathered the data in the normal way that any rigorous academic would do, so that the findings could be replicated, tested and built on. As such, it is not possible for anyone to know what was included in his study and - probably more importantly - what was not included.
The issue of what is not included in any study is important because it is the most common fault found in academic work.
As Dr Mercille's evidence base is not available, it is impossible to assess the accuracy of his study, but there is reason to question it.
Of the Prime Time shows over the bubble period which dealt with property, he claimed before the inquiry last week that "only two interviewees said clearly that there was a bubble and that it would burst, while the other 24 remained vague, argued explicitly that the housing market was and would remain strong in the years to come, or stated that a soft landing was to be expected if the boom decelerated at some point".
One of the contributors classified among that group of 24 said this during an April 2006 edition of Prime Time when discussing property, buying homes and the risks of a crash "debt levels have reached levels where the warning lights are beginning to flash urgently… People are already extremely indebted… Taking on further debt at a time when there are big risks is something people need to be very careful about…You could end up having your house repossessed".
I recall this instance because I was the person who said it. No thorough scrutiny of Dr Mercille's work is possible because he kept no record of it, but if he misclassified this example, how many other examples are there? The members of the inquiry would do well to bear this in mind when considering his evidence before them.