Advertisement
Column

The death of the local newspaper will carry a big financial consequence for taxpayers

According to a new study, the loss of reliable local news is driving up the cost of public financing -- and taking money from your pockets.

As newspapers perish, so goes a vital means of public accountability.
As newspapers perish, so goes a vital means of public accountability.

Journalists — like me — are fond of tooting our profession’s horn, extolling the virtues of a free and independent press and arguing that our efforts to inform the public remain the best bulwark against government abuses.

But despite our repeated protestations otherwise, too many Americans just aren’t buying it, frequently telling pollsters they don’t believe what is printed or broadcast. Furthermore, a not insignificant number of those we are endeavoring to protect are in agreement with President Donald Trump’s bogus claims that the mainstream media is “full of fake news.

Of course, such beliefs are incorrect. But there is more at stake than just the egos of journalists. These widespread beliefs, which can erode the foundations of the news business, pose real dangers to communities when reliable sources of information disappear. And beyond the griping of my fellow reporters and editors, here’s proof: a first-of-its-kind study which found that communities without reliable and authoritative local news reporting are more likely to experience elevated municipal borrowing costs, excessive spending on government wages, increased public sector hiring and, as a result, higher taxes to pay for government services.

In short, when your local newspaper shutters, your wallet is going to take a direct hit.

In a working paper released last month, a set of economists — Pengjie Gao at the University of Notre Dame; Chang Lee and Dermot Murphy, both at the University of Illinois — argue that communities that experience a newspaper closure are more prone to a lack of public accountability because there’s no watchdog on the prowl, sniffing out scofflaws and faithfullywarning citizens about government abuse or impropriety.

Advertisement

“As a consequence, the closure of a local newspaper creates a local information vacuum,” Gao, Lee and Murphy write in their unpublished paper, “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance.”

Indeed, there exists an abundance of scholarship that demonstrates how the diminution of news in a community – known as news deserts — leads to negative political and social outcomes, such as lower voter turnout and less informed citizens. Moreover, as previously reported, these are also environments in which President Trump’s typically dishonest ministrations have flourished.

But Gao, Lee and Murphy have taken this a step farther to examine how the absence of news in a community hits citizens in their taxpaying pockets. Drawing on academic research by other scholars, who have studied the importance of community-based journalism in covering local politics and elections, the paper’s authors devised an elaborate experimental analysis that demonstrates how the loss of a newspaper in a town or county “affects long-run municipal borrowing costs through the government inefficiency channel, and provide[s] evidence that government inefficiencies are more prevalent following a newspaper closure.”

In an interview with ThinkProgress, Gao estimated that borrowing costs in communities without a vigilant media presence increase by about 10 basis points following a newspaper closure. In real dollar terms, he said, that’s at least $650,000 for the average bond issue, which has an issue size of about $65 million.

Advertisement

“Keep in mind that this is the average cost for a single issue,” Gao said in a follow up e-mail, elaborating that communities frequently issue multiple bonds within the same time frame, all of which means the potential cost to taxpayers can mount quickly. “Counties can have many issues over time, and it is possible that borrowing costs may increase more in the future if the government monitoring problem worsens.”

For example, if the 10 basis point incremental cost rises to 30 basis points, then the average costs of the bonds would triple from $650,000 to $1.95 million per issue.

“Eventually, the tax payers are going to pay for this, and they may be ill-informed or totally unaware of what they’re paying for,” Gao said. “Without public scrutiny, the behavior of local governments is to kick the rock down the road, putting off the liability for the long term, forcing taxpayers to pay a lot more in the future.”

Bob Zaltsberg, editor of the Herald-Times in Bloomington, Indiana, is doing all he can to keep citizens informed. When one of his readers shared this study with him, it prompted him to devote his weekly column about its findings so that the 16,000 readers of his college-town daily could know the value of their newspaper.

In his column, he wrote that it was important for newspapers “to examine how public money is being spent, how rules and regulations are affecting members of the public and how our public officials are addressing problems brought to their attention.”

In a phone conversation with ThinkProgress, Zaltsberg said monitoring government officials was a challenge, and that it was especially difficult for his staff of eight reporters and six editors to cover every municipal activity. Nevertheless, they try their best. “You know, newspapers are under attack these days, so we can’t understate the importance of what we do too often,” he said. “A newspaper of any significant size can and ought to make a commitment to do the watchdog function.”

Advertisement

For several decades, all forms of media – but especially newspapers – have faced existential challenges from declining advertising rates, competition from alternative and on-line media and, worse still, public skepticism about their trustworthiness. It has taken an enormous toll. According to figures compiled by the Pew Research Centertotal weekday circulation for U.S. daily newspapers fell to 35 million in 2016, while total Sunday circulation declined to 38 million – the lowest levels since 1945.

As the number of daily newspapers dwindle across the land, residents living in places without local sources of information are more likely to be poorly informed — and easy prey to unscrupulous officials. Vanishing newspapers ought to be of great concern to more Americans, not just crusading journalists, because without public oversight and accountability, the self-governing nature of our nation is put at risk.

Worse, it won’t be sufficient to shout “fake news” when taxes rise to the sky and nobody can understand or explain why.