Good morning,

This is the year of elections, so it might be worth our time to reflect on the connection between media, politics and propaganda. In his book, The Crisis of Democratic Capitalism, Martin Wolf, a respected economic commentator, offers some food for thought. He writes:

“An important aspect of the new media derives from the fundamental economics of information in the new age: collecting information remains costly, but dissemination is costless. In the old days, it was possible to finance information collection by bundling news with advertising or by state subsidy of some kind, as with the BBC and similar entities. But the new technologies have unbundled news gathering from advertising, with the ads shifting to the technology platforms, which take little responsibility for verifying the information they publish. In the US, “digital ad revenue has grown exponentially, but a majority goes to Facebook and Google rather than to publishers.” Thus, half of all display advertising revenue in 2018 went to Facebook (40 percent) and Google (12 percent). Meanwhile, advertising revenue of newspapers has continued to fall. The result is a collapse “of the economics of news gathering.

The main exception is when the quality of the product and the economic status of the audience make paywalls work. But paywalls have the inevitable consequence of limiting access to high-quality and verified information. This is precisely the sort of news Trump called “fake,” by which he meant true and inconvenient. In the UK, The Guardian is trying to sustain itself with voluntary contributions.

But, overall, given the substantial costs of generating and publishing accurate information and the difficulty of getting paid for it nowadays, the net effect of the information revolution has been ubiquitous, and costless dissemination of noninformation, disinformation, propaganda, and lunatic conspiracy theories.

One way of thinking about the new social media is that they have made it far easier to spread “rumour” (what the Romans called “fama”) than before. It is, as a result, also far easier than ever before for the unqualified and unprincipled to influence public opinion. The results are both widespread cynicism about anything one is told, especially by figures of authority, as well as the emergence of passionate adherents of particular opinions in corners of the internet. Yet some things have not changed: it is still possible for political leaders to disseminate their propaganda effectively...

Yascha Mounk, a thoughtful observer, argues, “Over recent years, it has been the populists who have exploited the new technology most effectively to undermine the basic elements of liberal democracy. Unfettered by the constraints of the old media system they have been willing and able to say anything it takes to get elected—to lie, to obfuscate, and to incite hatred against their fellow citizens.”

Have a great day!

The stock markets are up and the consensus appears to be that India’s growth numbers look decent even as data from other parts of the world look stunted. But Vivek Kaul, writing in Deccan Herald, isn’t impressed. 

“While the media went to town talking up the 7.3% overall economic growth, there was barely a mention of consumption growing at its slowest pace in 21 years,” he writes.

“In fact, if we look at consumption growth from the end of 2018-19 to the end of 2023-24, it averages 4.5% per year. Compare that with the average consumption growth of 7.2% per year in the five years from 2013-14 to 2018-19, which tells us that a significant portion of the population is still struggling with the after-effects of demonetisation and the pandemic.

So, what is driving economic growth? Investments. In fact, investments are expected to make up nearly 48% of the increase in the size of the economy from the end of 2022-23 to the end of 2023-24. If we look at data over a 5-year period from the end of 2018-19 to the end of 2023-24, investments make up for nearly 46% of the increase in the size of the economy.

Typically, investments create jobs, jobs pay people, and people then go out and spend that money. But that dynamic isn’t playing out in full force. It could be because investments are happening in capital-intensive sectors, which aren’t large job creators.

In a recent research note, the Bank of Baroda’s Economics Research Department has a possible explanation. The note looks at investment intentions for April to December 2023. The services sector accounts for 49% of the investment intentions. Of which, transport services contribute 94% because airlines are placing orders for new airplanes.”