Study: Correlation Between Local Newspaper Closures and Increased Gov't Spending

P. Gardner Goldsmith | August 28, 2018
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The Brookings Institution has released a fascinating new study that indicates a strong correlation between local newspaper closures and subsequent expansions of government spending. And the study also reveals something many in the news field are overlooking...

When it comes to the physical size of the state, the number of people it controls, and its addressability and transparency via the press, the small-government boosters of the Founding Era were right. If folks are forced to live under a government, a state that is physically closer to the people over which it rules is more responsive to those people, and less likely to spend their money, than a government that is geographically distant and disconnected.

Let’s look at the newspaper closure aspect of the study first.

The study states at the outset of the abstract that it's authors (Pengjie Gao, Chang Lee and Dermot Murphy) believe “local newspapers hold their governments accountable.”

They also offer readers an excellent example of how we often mistake correlation with causation, falling into the classic logical fallacy of the assumption that because a phenomenon follows an event, that event is the cause of the phenomenon.

However, as the researchers have done in this study, with repeated observations of the same phenomenon, one can come closer in justifiably claiming causation when correlation is repeatedly shown.

So the authors of the study have strong justification to note this:

Following a newspaper closure, we find municipal borrowing costs increase by 5 to 11 basis points in the long run. Identification tests illustrate that these results are not being driven by deteriorating local economic conditions. The loss of monitoring that results from newspaper closures is associated with increased government inefficiencies, including higher likelihoods of costly advance refundings and negotiated issues, and higher government wages, employees, and tax revenues.

The researchers focused on 204 counties with a single paper that stopped publishing between 1996 and 2015 finding:

Wage rates, government employees per capita, tax dollars per capita, and the likelihoods of costly advance re-fundings and negotiated sales all increase following a newspaper closure.

Which indicates something many of us likely already knew. Politicians act with more gusto and less appreciation for local taxpayers when they have fewer people reporting on their actions.

Seeking opinions on the study, Cole Lauterbach, writing for spoke to Doug Haddix, Executive Director of Investigative Reporters and Editors, who summed it up succinctly:

There is more temptation for government leaders to just do what they want without feeling like there would be any consequences or anybody paying attention.

The study also notes that states with capitals geographically distant from their population centers (ex: CA, NY) see an even stronger correlation between the death of local papers and the increase in rampant government spending, taxation, and bonding (spending to be paid by future generations).

In other words, it seems that the tendency of politicians to run wild increases not only when local news reporters aren’t around to give information to readers, it increases even more when the government running things is geographically distant from the people.

So it appears that Thomas Jefferson was right on a number of fronts. If people live under the force of the polis (and that is not necessarily a given, as ancient Ireland’s non-polis Brehon Law system, and Viking Iceland’s Godord system have shown), they’d be wise to try to keep it small and “local”. Additionally, they might want to maintain a local news source. As Jefferson said in a letter to Edward Carrington:

(W)ere it left to me to decide whether we should have a government without newspapers or newspapers without government, I should not hesitate a moment to prefer the latter. But I should mean that every man should receive those papers and be capable of reading them.

And, of course, Jefferson meant “man” in the generic sense, as in all human beings, but this engenders two final observations. First, women are particularly effected when local papers die because women tend to focus less on national, abstract stories such as economics and economic policies, and more on human interest stories about “the poor” and local stories about children and education.

And this draws out the final, seemingly paradoxical, lesson about the importance of local media. Local press was a counter-balance to national news media. When nation-saturating television news networks dominated broadcasting, the national orientation of those networks tended to focus people away from their local neighbors and needs. Everything trended towards the “national crisis” that needed addressing on a federal level. That's not a positive trend.

Thankfully, online independent reporters are letting local people shine spotlights on local issues, and getting attention focused on local wrongdoing, so perhaps Jefferson’s hope is still alive.

That’s something to applaud, and something the big-spending politicians probably don’t like.