On the Media: Signal-to-Noise Ratio Edition

One thing that I’ve learned in three years of public commentary is that, in order to comment on public affairs, it is necessary to be a critic and student of the media.

I also have learned that little of the content in the media—however defined—represents actual information. 

Blogger and college professor Walter Russell Mead wrote the following in advance of the recent Federal government shutdown drama in a post headlined “Shutdown Battle:  All Noise, No Signal,”

The impending Congressional showdown over Obamacare and the federal budget has set the chattering classes ablaze all week, yet as with the Iran story, we’ve chosen to remain mostly silent on the topic.  To us, it seems like a lot of noise rather than signal.

Mead adds,

Pack journalism loves to obsess about these budget crisis stories and report day by day statements and moves, but they are almost always less important than the noise about them would suggest.

Indeed.  After the Federal budget showdown ended, we were left with something very close to the status quo ante.  In his 2012 book Antifragile, author and engineering professor Nassim Taleb wrote the following about newspapers,

They need to fill their pages every day with a set of news items—particularly those news items also dealt with by other newspapers.  But to do things right, they ought to learn to keep silent in the absence of news of significance.  Newspapers should be of two-line length on some days, two hundred pages on others—in proportion with the intensity of the signal.  But of course they want to make money.

A two-line newspaper would not do much for subscribers or advertisers, so we get dozens of pages each day, regardless of whether there is any real news to report, in line with the media business model.

Going in to the budget showdown, one could make the argument that the whole exercise was a two-line event, in Taleb’s formula.  The gallons of ink spilled, the round-the-clock coverage, the countdown timers, the count up timers, were not justified by the significance of the event

However, the underlying issue, Obamacare, is certainly worth the full 200 pages.

According to The White House, U.S. spending on healthcare represents 18 percent of our entire economy, as measured by Gross Domestic Product (GDP).  At 18 percent of GDP, the U.S. healthcare economy, as a stand-alone entity, is larger than all but four national economies:  China, India, Japan, and Germany.

Put another way, the U.S. healthcare economy—at about $2.9 trillion per year—is larger than the entire French economy, at about $2.3 trillion.  As socialist as France is, they do not try to micromanage their entire economy.  Why do we believe that managing an ever larger economy—through Obamacare—will succeed?

The trick is—when separating signal from noise—to identify the signal as it occurs.  It is much easier to identify significant events and issues, after the fact.

In an effort to identify what is really important, what is worthy of the reader’s time, this space will inaugurate a new tag, “Signal,” to identify the wheat from the chaff.  To merit the tag, the event/issue will have to pass the one-year test:  will this matter as much or more a year from now as it does today?

Obamacare clearly merits the “Signal” tag.  Once the healthcare exchanges were launched, there was no going back to the old status quo.  Regardless of whether we end up with single payer or move to a more free-market system, the almost $3 trillion health care industry will never be the same.