Made to order, breakfast and bulletins
A newspaper says news is special, it's not like packaged food. Oh, but it is. And in ways that can inform better journalism.
Do you often consume news and breakfast together, as this newsletter suggested at launch? In May, a resident Times column drew a distinction in the two things many of us start our day with.
We return to Peter Coy’s column, one of the first addressed in this newsletter earlier this year, where he usually covers economics in much-needed didactic and lucid posts. Coy responded to a Times special report on Tucker Carlson of FOX News. The gist was that news is a unique kind of product. It’s all very well for producers to offer consumers what they want in most other markets. But in news media, this leads to a perverse cycle: outlets that closely track what their audience likes in great granularity, as FOX does, let their coverage be driven entirely by that incentive. News stops showing you what you need to know and what you should know. By way of an illustrative comparison, he offered:
“The customer is always right” is a fine principle when the product is breakfast cereal but problematic when you’re selling news and opinion.
As an old disciple of European (Union’s) policy ethos, I thought, “How American!” Coy often caveats his column with, ‘I am not an economist’, but the quip betrays the precise model of how the United States and in turn, parts of the world that follow the US have historically conceived markets. And of course, why wouldn’t you follow the world’s most successful economy?
Because that economy has a uniquely checkered record: It is home to innovation so singular, with net positive global spillovers so great, only the willfully blind would deny it. On the other hand, that economy itself remains willfully blind to problems that afflict variously between a fifth to a third of its population.
On reflection then, it bears asking: What is it that the customer is always right about?
Of course the corporate axiom is verbal sleight. It is to remind you just how much the economic world is different from the everyday inter-personal world you inhabit. In the latter, two people who disagree cannot both be right. What ‘customer is always right’ actually conveys is that any two random customers who are bound to disagree are both right. That is, they’re both right to want different things.
There is a clear rationale for what economists call our ‘preferences’ to be differentiated. It is a crucial part of those venerated Econ 101 demand-supply models. If every consumer had the exact same taste, we’d have trouble organizing markets. Imagine a supermarket where every day everyone makes a beeline for one corner on one aisle and the rest of the shop floor gets ignored.
For a second time in this newsletter, let me bring up pneumatic drills as an example. When you and I walk into a chain DIY store, you might go looking for the hardest drill bits. I go for one with a firm grip. Now, the same firm that offers the hardest bits may not have access to the patented material that covers the grip on the rival’s product. Or, much as you don’t mind a solid grip yourself, you may not find a drill that has both features at your price point so you’re indifferent. Regardless, you and I are both delighted. We high-five each other singing ‘Hail invisible market forces!’ and leave the store with different drills.
Our diversified preferences as a collective also allow markets to be more dynamic. New producers entering the market can try to offer something better or more varied than what is already on offer. Established producers may also dip their toes to see if consumers might pay a bit extra for a new flavor or slightly better features. If enough people show disinterest, voting with their wallets, the new product lines are phased out, the new firms fold. So it is with most products and services that you bought last year. When you checked, a range of options were available, each with a slightly different bundle of features and a correspondingly different price tag. Then you chose.
These signals buzzing back and forth between consumers and producers keeps the market vibrant, current and optimal. It is also how the economy effervesces that all important ‘growth’.
< ToDo: decide if crafting a joke about bubbly economists popping champagne is worth the reader’s time. >
How well do breakfast cereals and news separately stand up to that model? Let’s look at these two product categories through that lens:
How much does it reasonably lend itself to differentiation?
How much of that differentiation may come from consumer preferences?
Coy makes the case, increasingly common since 2016, that news is not a product where customer preferences alone should rule. The very features they prefer might cause significant harm to them or others. It is not a great concern with pneumatic drills, but it suggests that for some markets, we need a third bullet:
Is the better solution to let consumers assume responsibility for consequences of their preferences or to eliminate certain harmful variants altogether?
Let’s put a pin in the news media side for the moment. What about food? Here’s the rub: though on the face of it food may seem very different from news as a product as Coy implies, it is also among a distinctive class of products where information is key.
For most consumers in OECD countries and for many in the rest of the world, processed and packaged food is not primarily about satisfying hunger. It is about taste and nutrition. The two values are not only often at odds, but fundamentally different on that dimension of information. Though both instructive in juxtaposition to news.
When it comes to taste, the producer doesn’t know exactly what consumers want. The information advantage is titled towards you. The moment you put something on your tongue, you know just how well you like it. Producers have to conduct expensive market research to learn what you want. Or, as above, they can go the trial-and-error route, also potentially expensive.
With nutrition, it’s the other way around. Where it comes to nutrition as well as its flip side, potential adverse health effects, you’re completely in the dark. It is the producer who knows exactly what went into the product.
Breakfast cereal is nothing like a pneumatic drill. Many of the drill’s features you can get a feel for right in the store. How heavy it is, how ergonomic, and yes, that grip. If you want the hardest drill bits known to engineering, you wouldn’t know in the store. All you have are the producer’s claims or assurances from the New York Times. But when you get home, you can start drilling into your granite counter and test it. In a consumer-friendly market, you can easily return it for a full refund.
With breakfast cereals, no amount of prodding at home will tell you all the additives the producer mixed in. If you decided to invest heavily in a state-of-art chemist’s lab in your garage and managed to sleuth down a list of all additives, you will still not know the potential effects most of them could have on your family’s health. In fact, in case the chemicals are new ones that the firm invented, no one in the world might know.
The information asymmetry means we need to reframe two of the above three questions:
How much of that differentiation may from consumer preferences given their information deficit?
Is the better solution to give consumers more information and then let them assume responsibility for consequences or to raise the cost to produce certain harmful variants? (Both involve regulation.)
(Mind you, where we invoke ‘consequences’ in those bullets or directly speak of health effects for your family, we’re not speaking of food alone.)
[ I’m not saying goth kids shouldn’t get their own cereal. Video: Jon Oliver complains there is so little news about breakfast cereal! ]
You might be thinking, everyone doesn’t share the same risk factors. Your aunt may have genes that make her more susceptible to cancer than you. The critical thing is, for a few more decades, we won’t all know that about ourselves! That goes for most carcinogens.
There is of course still definitely room for differentiation. Your athletic teenage children may need more protein in their diet than you do. You may want much lower sugar. But you’d not know about either the protein and sugar content or any of the dozen chemicals that have no calorific or nutritional value, which are added only to make packaged food a viable business (stuff that prolongs shelf life, emulsifiers, addictive flavors, colors, material that adds bulk or improves physical properties).
Which is why food is one of those industries where you need regulation to make businesses tell you what’s in the tin. Most countries require manufacturers to provide a nutrition label and list ingredients on the packaging. The rules vary considerably on what you need to report and how. That makes sense. There are pros and cons, for instance, to both, listing nutrition per serving size, as required in the USA or per 100g as in the EU. Some large manufacturers who rely on global exports might offer you both. Some requirements are simply cultural. Where Indians like having readily noticeable green and red dots to distinguish vegetarian food, bovine milk merits a green one!
But the rules also vary more than you might expect on what is acceptable in food. As the economies grow, so does the list of chemicals that you are allowed to slip into food in the USA but remain illegal in Europe.
Turns out the Europeans simply don’t agree that ‘“The customer is always right” is a fine principle when the product is breakfast cereal’. The reason for that stunning discrepancy is something they call the Precautionary Principle. To think that somewhere in the world, politicians use clearly articulated guiding principles (as against ideology) that govern all policy. Here’s the simplest summary: technology progresses rapidly. When adopting it, we cannot always have 100 percent certainty in assessing all its harmful effects, especially ex-ante and for the long term. It is best hence to use reasonable precaution as a guide to regulation. Let not the profit motive alone define what qualifies as improvement mindless of all unknown future costs.
The practical and operational manifestation of the precautionary principle in this space is the EU’s 2006 REACH Directive, which stands for ‘Registration, Evaluation, Authorisation and Restriction of Chemicals’. (A ‘Directive’ is EU guidance for member countries who can then adapt it into law as they see fit in their context.) In effect, any new chemical manufactured in or imported into the EU needs to be registered, which makes its health and safety information public. And if you’re to make it public, you have to run all the tests to first ascertain all that data.
It was a far-reaching regulation with an unprecedented scope. American conservatives would see it as a major hurdle to free market entrepreneurship. It significantly raises the cost of starting a new business or launching new products. At best, they’d say, it is paternalism. That is a word I always found odd in the context of policy. The modern state has a monopoly on violence! By its nature the government is ‘clothed with immense power’. Virtually its every act, its very existence, renders the word ‘paternalism’ moot.
Imagine the government, the same people who can order missile strikes and kill countless people to protect your borders (or for much less), presuming to protect your immediate health and safety at home. Remember, you cannot set up that hi-tech lab in your garage, but the government can. Not to mention the combined might of 27 rich countries!
Of course, for you and me, the alternative to paternalism isn’t exactly total freedom. You still remain just as ignorant. Except now you allow a business to tell you what you should eat. Paternalism may raise the specter of a nanny state and you imagine politicians making your choices for you, but in all likelihood, the person actually drafting the regulation is going to be a middle-aged government boffin. Who’d you rather trust to get you better information on nutrition, a career bureaucrat or someone who gets a private jet sooner the more you buy whatever she’s selling? In most countries, your safer option is the former. If you’re in one of the countries where you’re absolutely sure you trust a salesperson more than any part of the government, you’ve got bigger problems than a little unconfirmed carcinogen in your cereal.
If we are calling for some paternalism in what we read and watch, what we absorb into our minds, why not with what we ingest and put inside our bodies?
Which is to turn us back to journalism. What service does news media provide?
In a modern democratic economy, there is a deluge of information. News media has the job of winnowing it to feed1 you just what you need — Are politicians you voted for serving you well? What can you expect will happen to housing prices in six months? And yes, some information you don’t need, but want: Who won the match? Who will star in the adaptation of that bestselling novel? The core news product is curated information.
The information asymmetry aspect of products is again key because Coy’s first line was: “Economists generally believe that more information makes for better decisions.”
Oddly, the column was only concerned with information that producers have on what consumers want. Which makes the choice of breakfast cereal in the offhand comparison all the pricklier. It points to the obverse of the information deficit — the side that economists more commonly have on their minds and the one that more journalists should publicly ruminate on. What should consumers know about what they’re getting from their chosen media outlet?
News is not an industry where producers are required to label their product. What if it were though? Your online newspaper switches to a brown typeface on every line where it has not confirmed a quote it reports, red where a datapoint in a claim does not link to a reputed source. What if your news channel donned a sepia filter whenever an on-air anchor intermittently slips into opinion between streaks of reporting. And what a brilliant worthwhile use of an AI algorithm2 that would be!
The color of Tucker Carlson’s or Arnab Goswami ’s tie would stop mattering altogether.
Don’t forget to now and again check the Post-Date section on previous posts you liked. The flagship post on Liberalism just got a juicy new one!
The food term is not just for rhetorical analogy. We actually say ‘RSS feed’ or ‘Facebook feed’.
As a feature on your TV, not at the production studio.