Failure no longer matters

As the amount of communication increases, due to 24-hour news channels and the Internet, the ability to characterize the situation becomes paramount (as explained in my previous post).

So, the role of the media becomes ever more important, even as the number and type of media outlets also increases.

As major issues become more abstract and more complicated, it is more likely that neither the general public, nor the media themselves know the answers to the questions posed by these situations. So, the best presentation will always win out over the truth - because neither the public, nor the media can recognize the truth, so they can only pick the best presentation.

The classic current example is Bob Nardelli. Despite being a failure as the CEO of Home Depot, his superior salesmanship obtained him over $200 million in severence pay. He was then hired as the CEO of Chrysler, and you may have seen him before Congress, asking for a loan that the private-equity owners of Chrysler refused to give to Chrysler. (I do not want to get sidetracked into the issue of government bailouts, it's a far smaller issue than what I am discussing here.)

Another good example are stock brokers and finance journalists. After the "dot com bust" of 2000-2001, stocks that many, if not most, brokers recommended at over $100 per share, were selling for $25 per share. Did any of those stock brokers lose their job ? No - partially because brokerages make money on the commissions, not the value of your portfolio. But certainly those brokerages that charge extra for recommendations, did not refund fees, sack brokers, or even apologize for losing 75% of your money. In the recent stock market plunge of 2008, the situation has been the same.

But even more ludicrous is media reporting of the markets. When the price of oil recently climbed steadily for months to finally reach a peak of $147, journalists constantly tied every international political incident to the latest increase in the price of oil, as well as every weather event and minor refinery activity. When the oil price then plunged for months from $147 to its current $40, all the same geopolitical, weather and refinery events occurred, thereby automatically disproving all the previous reports. It turns out that as the oil price rose, more and more huge pension funds bought oil investment contracts, thereby raising the price purely due to increased investment, rather than anything having to do with physical oil use. When the price peaked, all the pension funds started selling their oil investments, and once again, the price plunge had nothing to do with physical oil use.

In a similar way, stock markets go up and down as an aggregate of millions of investors' subjective assessments. Every time the stock market goes up and down, j0urnalists come up with sound bite "reasons" - "the market was down today because investors were worried about...". In actuality, the stock market is the sum of a vast number of different transactions done for a vast number of reasons. And, careful investigation shows that other unreported factors are often the important ones. For example, in the Fall of 2008, on days of significant decline, which were reported by the journalists as "investors were worried about the latest ___ data", in actuality most of the decline was due to forced selling by large hedge funds that had to raise cash to give to clients who were asking for their money.

So, we have a society, where the most believable, attractive and convenient media explanation is generally accepted by the public as characterizing the current situation. The further we get from the concrete physical reality of previous centuries, the less truth is present in society.

In a post in the near future, I will explain how those concrete physical successes of previous eras actually lead directly to the absence of truth in today's society.