Why Press Freedom is Good Business

LONDON – Press freedom and independence, a staple ingredient of democracy worldwide, is declining at an alarming pace, according to the 2015 World Press Freedom Index. But the transparency and vigilance that a free and independent press provides are critical not only to democracy; they also serve as powerful weapons against forces, ranging from corruption to bad business practices, that undermine economic prosperity. Simply put, without high-quality journalism, achieving better, stronger, and more robust economies is not possible.

Every day brings examples of the threats, and in some cases attacks, that the press increasingly confronts, whether from authoritarian leaders or as a result of nonviable business models. Either way, at a time when we need serious investigative journalism and intelligent analysis of economic trends and business activities more than ever, the capacity to deliver them is rapidly being eroded.

One problem is that, with print advertising in terminal decline, media companies are finding it harder to subsidize the long-term research that in-depth reporting typically requires. Yet, by identifying and bringing to the fore issues that may influence political agendas and public life for years to come, the impact of such reporting can be enormous.

Consider Reuters’ 2012 investigation – requiring months of meticulous research – into Starbucks’ tax-avoidance scheme. The journalist Tom Bergin analyzed years of complex documentation to discover, expose, and explain the ins and outs of how the company was circumventing local taxation in the countries where it operates. His investigation triggered an avalanche that continues to reverberate around the world today, as many other multinational companies come under scrutiny. And research like that does not come cheap.

But a financing model that ensures the provision of this vital public good is of no use in the face of political repression, which is increasing worldwide. At the beginning of March, for example, Turkish President Recep Tayyip Erdoğan’s government shut down the country’s highest-circulation newspaper, Zaman, and security forces fired tear gas and rubber bullets at protesters outside the paper’s headquarters.

European leaders, including German Chancellor Angela Merkel, Italian Prime Minister Matteo Renzi, and French President François Hollande, all made the Zaman case a part of their discussions with Turkish Prime Minister Ahmet Davutoğlu when they met recently to discuss the refugee crisis. World leaders must continue to speak out – and to be adamant in their support of press freedom in their own countries. After all, the signal that such official behavior sends is one of a country going backwards – a stunting of innovation and growth.

China, now the world’s second-largest economy and a crucial source of global manufacturing and investment, would seem to belie any link between press freedom and economic success. And yet a fundamental lesson of the surge in financial volatility that began last summer is that state-controlled information is often bad information. Investors, it seems, have begun to appreciate the risk of doing business in an economic and business environment that they cannot fully understand.

Chinese media organizations are under constant scrutiny by the authorities, and editors have chafed at (and even attempted to defy) censorship. Most recently, the South China Morning Post’s Chinese language edition had its social media accounts blocked. Many foreign news websites, ranging from the BBC to Reuters, are routinely blocked from Chinese readers. In 2012, the New York Times website was blocked in China after the paper reported that the extended family of China’s then prime minister, Wen Jiabao, controlled assets worth at least $2.7 billion.

Similarly, foreign media organizations often cannot investigate Chinese companies and economic activity freely and accurately. Ursula Gauthier, the Beijing correspondent for L’Obs (formerly Le Nouvel Observateur), was forced to leave China in 2015 after the authorities refused to renew her visa. She is far from being the only Western journalist to be “neutralized” in this manner.

Then there are countries that don’t receive as much attention as they should. The ranking of Andorra, a tax haven, in the World Press Freedom Index fell sharply in 2015, because journalists cannot easily secure access to information about the banks operating there. The country suffers a “lack of any legal protection for freedom of information, such as the confidentiality of journalists’ sources.” And what little coverage Andorra’s banks do receive – such as the US Treasury Department’s money-laundering investigation into Banca Privada d’Andorra – has been disturbing.

The list of countries where press freedom is limited or under threat goes on, from Africa and the Middle East to Russia and most of the other ex-Soviet republics. Even the United States is seeing alarming signs, with the frontrunner for the Republican Party’s presidential nomination, Donald Trump, directing vitriol – and arguably inciting violence – toward journalists during his campaign rallies. Alarmingly, Trump has said that if elected president, he would change the country’s libel laws in ways that would endanger the free-speech principles enshrined in the First Amendment of the US Constitution.

An active, engaged, and independent press provides a fundamental public good: the transparency that makes political and economic accountability possible. In an increasingly complex and specialized world, its provision must be supported, protected, and encouraged. Yes, media organizations must find ways to finance worthwhile reporting, investigation, and analysis. Unfortunately, too many countries would be happy to have such problems.

Lucy P. Marcus is CEO of Marcus Venture Consulting. 

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