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July 13, 2008
David Warsh, Proprietor


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Getting On With It

It is becoming clear that the US is indeed facing its most serious economic crisis since 1932.  Last week it was the vast government-sponsored but publicly-owned pools of mortgage liquidity known as Fannie Mae and Freddie Mac that felt the pinch of the rolling sub-prime lending crisis. Together, they hold about half of all US mortgages. To keep them lending, Congress or the Federal Reserve System may have to tide them over, one way or another, until the peril passes, new supervision is put in place, and confidence is restored.

 

The ongoing turmoil in financial markers, combined with falling consumption, rising deficits, competitive challenges from abroad, war in Iraq and Afghanistan, oil approaching $150 a barrel and the threat of climate change, make this a somber time.

 

To the standard list of problems, add the plight of the newspapers, organs so crucial to the operating system of democracy that they may fairly be said to be as eyes are to the brain.  They are in a panic – at least their stockholders are. Shares of seven big newspaper companies hit a new low Friday, on what newspaper analyst Alan Mutter reckoned was worst single trading day in the history of the industry.

 

What are the prospects?  What are the chances that, in this moment of genuine peril, we might go blind?

 

Certainly the newspaper industry feels grim. Employment reached a peak of 445,700 in 1990.  Nearly one in four jobs has disappeared since then — half of them in the last three years. Those remaining are stretched thin.  For the most part,  they no longer have time to do what Los Angeles Times economic correspondent  Peter Gosselin has done – take a couple of years to build his landmark coverage of burgeoning family income volatility into a novel and important book.

 

High Wire: the Precarious Financial Lives of American Families is the best book of its sort since New York Times reporter Louis Uchitelle’s The Disposable American:  Layoffs and Their Consequences in 2006; better, perhaps, since Gosselin examines bourgeoning risk of all sorts: benefits, jobs, welfare, housing, education, retirement, health and catastrophic loss, as in New Orleans. (Former Boston Globe reporter Bruce Butterfield’s epic on Aaron Feuerstein and Malden Mills remains a late starter in this category.)

 

Social scientists may be more analytic – Jacob Hacker in The Great Risk Shift: the New Economic Insecurity and the Decline of the American Dream, for example; or Frank Levy and Richard Murnane, in The New Division of Labor: How Computers Are Creating the Next Job Market – but no one is more humane than Gosselin. “Whenever cutbacks are floated either by business or government,” he writes, “there’s somebody out there on the receiving end, somebody whose life is about to get tipped over.”

 

Appropriately, Gosselin begins his account with the story of the Mayflower Compact, when, facing desperate times, New England’s first settlers held a shipboard meeting and “agreed to yield some part of their individual autonomy to the group.” More important, he writes, “they agreed to a certain mutual responsibility for the well-being of one another, even if meeting that responsibility might sometimes clash with their private interests.” And indeed, this agreement, between religious dissenters full of passionate conviction and the ordinary Englishmen and women who helped fill their ship, is an essential pillar of our civic religion.

 

Gosselin omits, however, what happened next:  the near-wreckage of the colony in its first year over the collectivization of its agriculture. As George Willison recalls, only when plots of land were privatized in the spring of 1623, every man to plant corn “for his own perticuler,” did harvests pick up. North Americans immigrants have been wrestling ever since with the tension between public purpose and private gain.

 

But then Gosselin’s task is descriptive, not prescriptive. There is relatively little in his book about the forces that have brought about the new volatility, increasing global competition and trade. He recognizes that for a quarter of a century, growth-oriented policies of deregulation, restructuring and openness have legitimately gained ground because most people have preferred being richer to being more fair. He is concerned mainly with rendering a clear accounting of the costs.  It is as if he were to say of the war in Iraq, I know it was undertaken because they thought it would make everyone better off; but here is how many dead there may have been, and how they died, soldiers and civilians alike. High Wire is a remarkable act of witness.

 

Gosselin documents, persuasively, that life’s “beta” has increased in these United States during the latest binge of globalization, an argument first advanced nearly fifteen years ago by Peter Gottschalk, of Boston College, and Robert Moffitt, of the Johns Hopkins University. The frequency has nearly doubled in which reversals of fortune turn catastrophic for everyday folk – a lost job, a divorce, a traumatic injury, a serious illness, the death of a spouse – thanks mainly to the erosion of the insurance principle. After more than a quarter century of globalization, there is plenty of damage to report, and it is impossible not to be moved by Gosselin’s careful and mellifluous reporting. His purpose is to persuade us “to reset the balance point between what’s acceptable as good for the individual and what must be recognized as good for the many.”

 

There are going to be far fewer books like this in the future, by newspaper pros like Gosselin, now that the era of newspapers’ semi-monopoly on eyeballs and advertising is over. We are the poorer for it. Other institutions will arise in time to supply this kind of penumbral knowledge, the low-key elaboration of the news which in the past was quite dazzling in its profusion and variety wherever there was a good big-city newspaper or two. Today, the books by newspapermen and women that do appear tend to be semi-official products authorized from top down, an increasingly self-conscious form of marketing.

 

Meanwhile, in the running family argument that Gosselin describes in the acknowledgments section of his book, I have to say that his wife, Robin Toner, herself a distinguished national reporter for The New York Times, has the upper hand. He writes, “As a reporter, she believes if you have something to say, say it in a daily or a one or a two-week developed piece, preferably on Page 1, and get on with it.”  Those of us who write books have made our choices.  Those still working for newspapers should bend to what is, after all, a sacred task. Among their patron saints is the long-forgotten reporter for Joseph Pulitzer’s New York World who phoned in news of a turn-of-the-(twentieth)-century commuter train crash in Connecticut — just before expiring of the injuries he suffered in it.

    

Will newspapers survive their current depression?  Of course they will.  They are, it seems to me, nearly a sure bet. They’ll be sharper, shorter, more concise. They’ll be more clear in their own minds than they are today about the audience they seek to reach, more confident than they are today about their place in the scheme of things. They’ll be around far into the future to organize the public discussion of crises like the current one.

 

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One way that newspapers are seeking to make up for lost revenue is by encouraging the sale of paid death notices.  This is perhaps a little unsavory, preying on the bereaved in moments of weakness.  On the other hand, it gets more cash into the till and more news into the paper, even if it is unedited.

 

Certainly the enlarged “Deaths” sections, with their agate type and candid photographs, produce some illuminating insights.

 

Gerald Tsai died last week at 79. He was an eminent former Bostonian, who, long before Peter Lynch and his Magellan Fund, put Fidelity Management and Research Co. on the map with its first aggressive growth fund, which he started in 1958. After concluding that he would never run the Johnson family firm, Tsai defected to New York to start the Manhattan Fund in 1965 and become the most famous of that era’s stock market “gunslingers.”  But he remained active in the affairs of Boston University, from which he had graduated, as a long-time trustee and loyal ally of its institution-building president John Silber.

 

The New York Times produced an excellent obituary, seventeen inches of type, complete with a photo and even a quotation from John Brooks wonderful The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish ’60s: “So swift and nimble at getting into and out of specific stocks, that [Tsai’s] relations with them, far from resembling a marriage or even a companionate marriage, were more often like that of a roué with a chorus line.”

 

But in the paid notice, his family elaborated somewhat on the role of his mother, whom the Times obit had mildly noted, encouraged him to move to New York. “Jerry was a devoted son and regularly sought out his mother’s advice before making a major business decision. For instance, Ruth encouraged him to join Primerica, despite his reservations, and then backed his idea of acquiring Smith Barney.  He often said that her faith in him gave him the confidence to succeed.”

 

Gerry Tsai was a remarkable investor. So, it turns out, was his mother.

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