The Economics of News Stories

When a big story breaks, like the killing of a major figurehead of a terror corporation, it follows the typical market model.  More stories (firms) enter the market (news stream) given the demand and resources, until the market is saturated (people get tired of it) or a more viable alternative (new story) comes along.

Just as a new product generates a lot of interest (a fad) for awhile, a new meme spreads rapidly until it reaches a point where it hits dead walls (places it either can’t spread due to lack of saliency or where it has already spread) or runs out of steam (the spreaders give up on it).

All systems are informational systems.  The fact that information spread is vital to every aspect of human life still has not quite been recognized by most policy makers.  Secrecy is the equivalent of clogged arteries to an economy; we get heart attacks, where lack of fluidity in the market causes various sectors (organs) to seize and cell death begins to occur (firm closures, downsizing, layoffs).

Worse than simple secrecy is the one-way mirror.  Asymmetric informational flows are poisonous because of the ability for only some firms to recognize trends.  When a piece of information is only available to limited numbers, it can never reach its full potential.  That is why Open Source works: spread the information of how a piece of software is programmed and the result is better software because more eyes swept over it and had the opportunity to refine it.

All of our current problems, from health care to warfare to budget to terror scares, are the result of poor informational flow.  Many of these problems are caused by man-made dams in the information flows, where a single company or an industry seeks competitive advantage or to simply perpetuate their cash flows through the ignorance of others.

It’s vital we recognize the harm from informational blockage, lest we repeatedly find ourselves victimized by poor information.