The financial press and the public

Robert Teitelman of The Deal tries to reconcile the difference between a financial press that supposedly did not act in the best interests of the general public in reporting leading up to the economic crisis and a financial press that increasingly uses social networking to talk to the people.

Teitelman writes, “What I’m not saying here, mind you, is that a belief in social networking was the reason financial journalists failed to ring the fire alarm loud enough to deter the crisis. That would be stupid.

“In fact, these tensions are shared by journalists, policymakers and, in its clearest manifestations, the markets themselves. In a democracy, in a free-market system, we ritually ascribe wisdom to the collective. The fundamental basis of efficient markets is that the market as a whole is the best processor of information — far better than, say, a policymaker or an investor, no matter how brilliant (the fact that we say that and act differently tells us something). That set of free-market beliefs, which has been altered and reshaped recently by behavioral economics and perhaps by our reaction to the slump, also defines the ethos of social networking. In short, maybe the crowd isn’t always so smart all the time.

“Is there a way to reconcile these two worldviews? Well, of course there is, starting with the notion that ultimate wisdom exists in neither of them, that the most fruitful situation is to allow that tension to persist, to shuttle back and forth between the two views.”

Read more here.