A WEEK IN ECONOMICS (15/07/13 – 21/07/13) MORAL OBJECTIVES AND MARKET DEMAND

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Week-in-Economics

Print media is dying. The internet has allowed people to read news swiftly and from a number of sources, often times for free.  Readers are shifting to the net, and papers and magazines have to find alternative ways of generating their income to produce high quality journalism, ground breaking journalism, journalism that provides acute insights and relevant information.

Tabloids, more often than not, do not produce relevant journalism. They produce sensationalism, and sensationalism sells. Yes, there have been a number of investigative pieces that have exposed corruption at the highest echelons of society, but do we really care about what Beyonce’s baby’s name is?  Many people do, so they turn to the net to find out. They do not need the Sun or the Daily Mail to inform of them of this life changing fact.

It is this kind of banal information that brings in the readers. And the Daily Mail has managed to capture the zeitgeist, with its website that attracts 8 million readers daily.The Mail’s penchant for right wing views, controversial titles (“Parents who let their children get badly sunburned should be referred to social services for neglect, say campaigners”), cultural idiosyncrasies (“’Go ahead and marry me off – I’ll kill myself’: 11-year-old child bride’s defiant YouTube message to family after fleeing home in Yemen”), celebrity shenanigans and exposes, have obviously struck a nerve with millions. More views, more advertisers, more money.

There is a certain contradiction in the Daily Mail in that it attempts to balance its desire to be a moral mouth piece complaining about the social degradation of society while at the same time offering salivating readers salacious gossip. But to attract readers they need to appeal to a broad base. It is the only way to survive.

In doing so, philosophies and objectives become blurred. Keeping up with the Jones is difficult yet it is the only way to survive. Giving readers what they want brings in money, and papers need to know what people want. So while they may start off with a certain goal, losing sight of market need can be detrimental.

The markets are the same. Stock markets fluctuate according to the demand of individuals. Once popular companies can lose market share if they fail to keep up with changes. Kodak, the erstwhile mighty camera company, filed for bankruptcy in 2012. It could not keep up with digicams and smart phones. It did not have the foresight to change market goals as Apple or IBM did.

But these companies are more than just about the product. The new generation of companies like Apple, Google and Facebook are offering a social revolution. Their aims and goals from the outsight were not to exploit a niche to make money: it started on the idea of affecting people’s lives, everyone’s lives. 19th Century capitalistic companies were to conquer; today’s companies are more into collaboration.

Thus the basic philosophy of a company can be imbued in a product, and the greater the market share of the company, the more these values spread. The more people are willing to accept these values, the more likely new products will be created whose objectives are to uphold these values. Today we see companies paying close attention to social responsibility (trainees at corporate law firms go to poor neighbour hoods to teach), and billion dollar companies are giving back to communities (Former President of Ebay has set up a social entrepreneurial organisation, The Skoll Foundation). There are now banks based on equity (The Cooperative Bank) and funds dedicated to ethical industries (F&C Investments).

In a free market economy, entrepreneurs can change the way people act and think. Transacted products show our values. In the financial markets, there are no tangible products and so the motivations are driven by numbers. The only thing that will then make sense is numerical changes and so, in effect, the agents of the market would want to see the high numbers. The philosophy in the financial markets is profit maximising, which imbues itself amongst all the financial agents.

These financial agents are more focused on analysing market trends and acting as a catalyst; they will not be creating market trends; not like the new batch of entrepreneurial companies. Their focus is on exploiting profit opportunities, and as we saw from the credit crisis, if market agents are involved in highly risky transactions, this could have a huge negative impact on the economy.

But this is their objective, and many are looking to do it by any means necessary. The overall markets are encouraging them to make money. In such a situation, the government has to step in to regulate, yet the question that we should be asking is whether this kind of behaviour is the right behaviour for wider society. The philosophy of the markets might be profit maximisation, but there is a cost. Just because there is demand, does not mean that one should exploit the markets. It has long term effects. It is also what the Daily Mail is doing: offering a noble objective, but exploiting people’s weaknesses to generate income.

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