How does press freedom factor into current global concerns over the financial markets and the drying up of credit?
I just went to a conference that discussed the relationship between the economy and the rule of law. Former Federal Reserve Chairman Alan Greenspan was featured as the keynote speaker. (See “Former Federal Reserve Chairman Predicts Economic Rebound.”)
In the middle of his remarks on how legal guarantees accorded to property rights and ownership have elevated general standards of living since the early 18th century, Greenspan pointed to how a free press, along with the protection of minority rights, has proven “the most effective form to safeguard [private] property.”
His argument is that the watchdog role of the press and its ability to inform the population contribute to economic stability.
“[D]emocracies rarely allow discontent to rise to a point that leads to explosive changes in economic regimes,” he said. This stands in contrast with authoritarian states that, even if operating under a capitalist economy, are “inherently unstable because [discontent] forces aggrieved citizens to seek redress outside the law.”
He quoted Nobel laureate Amartya Sen’s observation that “no substantial famine has ever occurred in any independent and democratic country with a relatively free press.”
Why is this? According to Greenspan, it’s because the news media in authoritarian regimes tend towards self-censorship. “[M]arket-interventionist policies – the most prevalent cause of disrupted distribution of food – go unreported and uncorrected until too late.”
So, if you’re living in a society with a relatively free press, consider the possibility that all the gloomy stories you’re reading about the economy might be helping to prevent an even greater crisis.