Sometimes at least a tear flows when an editorial office somewhere in the country closes its doors forever. Most citizens, however, hardly notice the great newspaper die-off in many western industrialized countries or they just shrug their shoulders: It just didn’t fit in with the time, they say, as if the local paper, with its often decades-long tradition, was a walkman or a telephone booth .
A study from the USA now shows that with the local newspaper more is disappearing than a piece of culture, yes, that the closure can make citizens’ lives more expensive and dangerous. In the paper, economists Jonas Heese, Gerardo Pérez Cavazos and Caspar David Peter examine how local companies react when the last journalist has left town. Result: The cases of fraud, financial offenses, water and air pollution as well as violations of labor protection law are increasing, the level of criminal energy is increasing. “When there is no longer a local newspaper that keeps an eye on the local economy, many companies clearly see this as a free pass for fraud and rule violations,” says Heese, who has been researching corporate misconduct at the elite University of Harvard for years. Pérez Cavazos teaches in San Diego, Peter in Rotterdam.
In the past 20 years alone, the sold circulation of all US local newspapers has roughly halved, and dozens of publications have completely disappeared from the market. In some places there is no longer an independent medium. To find out what the consequences are, the scientists looked at the development of corporate crimes in 45 affected districts from all over the United States. They used the “Violation Tracker” of the non-profit organization Good Jobs First, which lists how many fines the 44 most important ministries and regulatory authorities in the country have given a company over a certain period of time. If you enter “Deutsche Bank” in the search mask, you will learn that the money house and its daughters have committed exactly 76 rule violations since 2000 and had to pay fines of 18.3 billion dollars.
In regions with no local newspaper at all, fines rose by 36 percent
During their examination, Heese, Pérez Cavazos and Peter came across 1,383 stock corporations, which violated the law 26,450 times in a total of 10,000 local branches. This corresponds to an increase of 1.1 percent compared to those districts in which the newspaper landscape remained unchanged. The increase does not sound too dramatic at first, but this also takes into account those cases in which a single editorial office was closed, but other local newspapers continued on site.
Two other values are therefore more meaningful: The sum of the fines that the authorities imposed on the companies increased by an average of 15 percent – in those districts in which there was actually no local newspaper at all, by as much as 36 percent. “The higher number of penalties imposed is one thing. Far more serious is that the severity of the offenses increases dramatically,” Heese said in an interview with the Süddeutsche Zeitung. In monetary terms over three years, penalties per company increased by $ 30,000, or one percent of local sales. For an average of 41 companies in the circulation area of a local newspaper, this corresponds to an increase in fines of 1.2 million dollars. In order to check their results, the scientists also evaluated the emissions register of the national environmental authority EPA. Accordingly, the emission of toxic gases in regions where editorial offices were closed grew by an average of 18.3 percent.
From the point of view of the scientists, the number of unreported cases is very high
But even that is only half the story, because the authorities can only impose fines in cases in which a company is actually caught. But it is precisely this research work that local journalists often do; often enough, the supervisory authorities only find out about illegal machinations from the newspaper. “Without a local newspaper, there is no longer anyone who employees of unscrupulous companies can turn to with information,” says Heese. “The numbers that we have determined are therefore the absolute lower limit of what actually happens in terms of violations of the law. There should also be a high number of unreported cases.” And even if a company is caught: “If there is no local newspaper, it can pay the fine without anyone reporting about it, which would damage its public reputation.”
Heese’s study fits in with a study by three scientists from the University of Illinois at Chicago and the University of Notre Dame from 2019. In it, the authors Dermot Murphy, Pengjie Gao and Chang Lee come to the conclusion that the closure of American editorial offices in the administrations of the cities concerned and boroughs often have higher budget deficits, rising finance costs, and public service inflation. An ordinary municipal loan suddenly cost an average of $ 650,000 more in interest if knowledgeable journalists were no longer keeping an eye on the chamberlains. A local newspaper, say the scientists, will save taxpayers money. It has also been shown that new online networks cannot replace the work of local, experienced and well-connected local reporters.
At the beginning of his investigation, Heese had definitely had doubts as to whether smaller media companies would make a significant contribution to the detection of white-collar crime. “We had initially suspected that local newspapers tend to treat local companies with care – also so as not to mess with potential advertisers,” says the economist. “Our investigation has shown, however, that the newspapers actually perform their monitoring function.” Conversely, this means that once the editorial office is closed, citizens can expect that a criminal company will sooner or later try to pass some of its costs on to them. “When local newspapers disappear from the market,” Heese concluded, “the general public pays a high price for it.”