Monday, 1 August 2016

The role of the Irish media in times of financial crisis

Irish media accused of favouring business interests. © Flickr, European Parliament

In their book on the financial collapse, "The Fall of the Celtic Tiger", Anton Murphy and Denis O’Donovan recognise the media as one of the groups that, explicitly or implicitly, shaped the environment in which major economic mistakes were made during the boom years. According to Julien Mercille from University College (UCD) Dublin, in Ireland, some commentators have noted that news organisations failed to give proper warnings of the impending crash.

What once feed and nurtured the magnificence of the Celtic Tiger soon became a cataclysm. In 1996, total property-related taxes accounted for 4% of government revenue, by 2006, they accounted for more than 17%. Property-related lending in the 5 years prior to 2007 led to substantial increases in bank lending with the total assets of the Irish banking system five times bigger than the size of the economy at its peak. The total stock of mortgage loans in Ireland exploded from €16 billion in the first quarter of 2003 to a peak of €106 billion by the third quarter of 2008 – about 60% of Ireland's GDP for that year. 

The exposure of the banking sector to the property market turned out to be fatal for the financial system in Ireland. A research study conducted in 2010 by Dublin City University on the role of financial journalists during the crisis concluded that during the economic burst Irish business journalists "essentially became advocates" for bankers and property developers in order to preserve access to sources.

Back in 2014, following the Banking Inquiry, former MEP and Socialist MP Joe Higgins proposed an investigation to the role that the media had during the period before the market burst. Higgins considered the media, like any other organisation, should be accountable for not exposing crucial information timely. “They have to answer, like other major organisations and influential organisations in society, in regard to how they property bubble developed and what their role was in relation to reporting and how they reported on, for example, the price of a home going up by the equivalent of the average industrial wage for ten years up to 2006", said Higgins. They would be questioned on the impact their coverage had on the inflation of the property bubble in Ireland including, for example, newspapers which ran large property supplements at the height of the Celtic Tiger. 

In fact, Morgan Kelly, a Professor of Economics at UCD wrote an article, in late 2006, in which he foresaw that real estate prices could possible fall 40% to 50%. The article with the title "How the housing corner stones of our economy could go into a rapid freefall", was rejected by the Irish Independent and the Sunday Business Post. By 2007, the Irish Times accepted to publish Kelly's alarming interpretation of the property market at the time, which attracted widespread public attention as well as considerable criticism.

In 2014, Julien Mercille, a lecturer at UCD, wrote a book titled "The Political Economy and Media Coverage of the Irish Economic Crisis: The case of Ireland" where he argued that the news organisations convey the views of political and economic elites and identified four factors that support his belief. First, the weight of corporate and government links embedded in the media. Second, advertising as a crucial source of revenue – particularly on market property during the period prior to the crisis. In third place comes the importance and difficulty of sourcing.

Mercille claims that journalists depend mostly on mainstream institutions for their reports and therefore both the government and corporations viewpoints are predominant in the media. Finally, the neoliberal ideology reflected in the efficiency of the free market's uphold and individual responsibility. The current dominant trend of neoliberal financial economic theory conceptualises the role of journalism extremely narrowly, viewing financial reporters as little more than conveyor belts of financial data to investors.

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