Turn Out The Light


Turn Out The Light

When the last local journalist at the last local newspaper has turned out the light and left the building, does anyone expect local government to run more efficiently?

When the people whose job it is to monitor and report on how public servants spend public money and implement public policy have vanished, will these public servants start policing themselves?

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When no one is around to attend five-hour school board and city council and legislative committee meetings, and then write about and report what was discussed and decided, will the board members and council members and legislators always do what they were elected to do: represent the best interest of all their constituents?

Has the very nature of humanity changed?

Back last June, three finance professors — two of them with the University of Illinois at Chicago and one with the University of Notre Dame — wrote in the Columbia Journalism Review about a study they conducted. They examined the effect of local newspaper closures on public borrowing costs.

Their CJR piece was a simple summary of their study, which was published in May 2018 in the Journal of Financial Economics. Here are what we in the business call the “nut grafs”:

“Following a newspaper closure, municipal borrowing costs increase by 5 to 11 basis points, costing the municipality an additional $650,000 per issue. This effect is causal and not driven by underlying economic conditions. The loss of government monitoring resulting from a closure is associated with higher government wages and deficits, and increased likelihoods of costly advance refundings and negotiated sales. Overall, our results indicate that local newspapers hold their governments accountable, keeping municipal borrowing costs low and ultimately saving local taxpayers money.”

But maybe, along with that sea change in the nature of humanity, money doesn’t matter anymore either.