How Media Failed In The Wake Of Lehman Brothers' Collapse
Lehman Anniversary Highlights Media's Role In Persistent Inequality, Lagging Recovery
Blog ››› ››› CRAIG HARRINGTON
Five years after the collapse and bankruptcy of Lehman Brothers, media are turning a blind eye to persistent economic inequality and poverty, and whitewashing the effects of austerity on preventing economic growth.
Recovery At The Top, Stagnation At The Bottom
September 15 marked the fifth anniversary of the collapse of Lehman Brothers, the investment bank whose bankruptcy set off a global financial crash and dramatically accelerated a recession that began in the United States in December 2007. For nearly two years, the American and global economies were marked with enormous job loss, a collapse of housing and investment values, and the looming prospect of economic depression. Five years later the economy has yet to fully recover.
In the past five years, in large part thanks to unprecedented government intervention, financial markets have more than recovered from the 2008-2009 collapse. Since bottoming out on March 9, 2009, investment markets are up across-the-board. The Dow Jones industrial average crossed the 15,000 point threshold on May 7 for the first time ever and currently sits near its all-time high set on August 2. The other major indices are doing just as well. The S&P 500 crossed the 1,700 point threshold on August 2, when the NASDAQ also set a new 13-year high.
Corporate profits have ballooned along with the soaring stock market. CNNMoney reported in December 2012 that quarterly corporate profits set a new record, but it also noted that workers' wages had "fallen to their lowest-ever share of GDP." When Business Insider reported on the same phenomenon in April, profitability had continued to rise as wages continued to fall. Wage growth has largely been captured by the highest earners.
The top end of the economy has recovered from the collapse and recession, but other indicators remain stuck. Stagnant and falling wages contribute to growing economic inequality and diminish the purchasing power of the American consumer economy. The Economic Policy Institute detailed the effect that a decade of wage stagnation has had on the shrinking middle class and swollen ranks of working poor.
Unemployment, while falling, remains a drag on economic growth and has remained higher than pre-recession levels thanks largely to policy decisions in Washington.
Economist Jared Bernstein notes that poverty rates have barely fallen since the end of the recession, yet another indication that the growth seen over the past several years is not reaching the broader economy.
The economy is growing, but media have done a poor job acknowledging the causes and symptoms of lingering structural inequality. Five years after the Lehman Brothers collapse, media have been complicit in exacerbating structural inequalities by failing to cover the issues or grant a voice to groups that continued be to economically disadvantaged.
Media Ignore Economic Stagnation, Growing Inequality
On September 3, economist Emmanuel Saez of the University of California, Berkeley released updated information for his "Striking it Richer" project, a long-running study of the evolution of income distribution in the United States. The research reveals that the top 1 percent of income earners has captured 95 percent of the income gains during the first three years of economic recovery.
According to the Associated Press, the share of income captured by the wealthiest was the highest since 1928, a year before the onset of the Great Depression.
Five years after the financial collapse, the wealthiest subset of the population has comfortably returned to pre-recession standards for income and wealth accumulation. Mainstream media coverage of poverty and low-income Americans has largely failed to highlight persistent economic inequality. Media Matters' analyses of print, network, and cable media consistently show that inequality is pushed to the back seat in economic coverage. While media outlets are quick to cover economic developments -- particularly when they pertain to debt and deficit reduction -- reports pay little attention to the mechanisms that trap Americans in poverty or the causes of rising economic inequality.
A Media Matters review of print news coverage of poverty in the summer months revealed only 19 percent of stories offered significant contributions dealing with inequality.
Similarly, a Media Matters review of cable and network news coverage of poverty concludes just 9.3 percent of segments on the economy contributed to a dialogue about inequality.
Right-Wing Media Attack Low-Income Americans, Anti-Poverty Programs
While mainstream outlets have been hesitant to enter discussions concerning economic inequality, low-income households and anti-poverty programs are regular talking points in right-wing media. Rather than inform viewers and readers about the presence of and solutions to structural inequality, the typical right-wing narrative of poverty in America is designed to demonize the poor. Instead of discussing why poverty has expanded in the wealthiest country on earth at a time of overall economic growth, right-wing media prefer to attack the expanded anti-poverty programs that serve tens of millions of Americans.
Under the guise of easing a bloated federal budget, the right-wing media have fixated on attacking anti-poverty programs and criticizing impoverished Americans living on government benefits as lazy. Nutrition assistance has become a particular target of right-wing media animus. Fox News' attacks on the Supplemental Nutrition Assistance Program (SNAP) reached new heights with a misleading documentary showcasing a single benefits abuser to suggest the program is rife with fraud.
In June, the right-wing echo chamber had already emboldened House Republicans to remove nutrition assistance from the federal farm subsidy bill to which it had been tied since 1949. Now, reports suggest that Fox News is using its fact-free food stamp special to push lawmakers toward legislation that would cut $40 billion from SNAP over the next decade.
Right-wing media have also targeted low-income and minimum wage workers. Economists agree that increasing the minimum wage would have beneficial economic side-effects, which the right-wing narrative completely ignores. Right-wing media focus on the need for minimum wage workers to find better paying jobs, which do not exist, rather than acknowledging the negative effect of inflation on the minimum wage. A prominent talking point in the right-wing media is the notion that increasing the minimum wage is a reward for mediocrity and a lack of entrepreneurial spirit.
With mainstream media largely ignoring the problems associated with poverty and inequality, right-wing media maintain the only prominent voice on the issues. Their antagonistic approach to poverty frames a debate centered entirely on what to cut, and by how much, with no time given to opposing views concerning vital investment and the merit of a strong social safety net in mitigating inequality.
Right-Wing Outlets Hype Harmful Austerity Measures
Attempts to alleviate poverty and mitigate economic inequality, such as increasing the minimum wage or expanding a safety net for those who fall down the economic ladder, have been held up by a zealous right-wing opposition to the fundamental role of government, particularly concerning federal spending.
The right-wing's debt and deficit hysteria spilled over into mainstream outlets thanks to a paper by Harvard economists Carmen Reinhart and Kenneth Rogoff, which warned of potential horrors brought on by government spending. The study was eventually and thoroughly debunked through peer review, but at that point pro-austerity policies were already in effect.
Though the academic support for economic austerity has dwindled, the effects of already enacted policies continue to be felt. Mainstream media support for austerity is less pronounced, but right-wing efforts to maintain the austerity status quo remain in full force.
Right-wing media continue pushing for reductions of federal spending, falsely claiming the government spending hurts economic growth. They also refuse to acknowledge the negative side-effects of budget sequestration, which is set to cut hundreds of billions of additional dollars out of the economy over the next decade.
Despite a lack of evidence, the right-wing media continue embracing budget austerity that only acts to weaken the recovery while depressing the economic indicators that most affect the vast majority of Americans. They fail to recognize the growing economic consensus that fiscal austerity and paranoid deficit-constraint is hurting economic growth, with harmful effects for those at the bottom of the socio-economic ladder.