20 April 2020

The problem with a ‘windfall tax’ to bail out newspapers


The National Union of Journalists is calling for taxation of the digital tech companies to pay for a News Recovery Plan for British newspapers and media outlets taking a hammering from the coronavirus.

Of course, we already have a tax-funded media outlet of considerable size in the form of the BBC. The idea we need another tax to achieve the same aim of holding truth to power does rather suggest the first isn’t working. Who knows, perhaps the NUJ is suggesting defunding the BBC, which is an idea I’d have no issue with at all.

There’s a deeper misunderstanding here though. As even Karl Marx insisted, economies evolve. True, he thought they did so according to rigid rules of history rather than Darwin’s rather more correct contention that fitness for survival was generated and evaluated by the surrounding environment. There was and is no “right” form or structure, there is merely that which survives in the time and place.

In the economy that environment is largely determined by technology – the same thing that Marx insisted shaped social relations. A mode of relation, just as a mode of production, can and will be made outdated by technological change. That is what has been happening to British newspapers for some time.

There’s little escaping the fact that the internet means evaluating and printing the news is an outdated model. As has been said about all sorts of things the internet disintermediates, and that’s what happened to the papers. We no longer need them for job ads, crosswords, TV listings and classified ads – all that remains is news and comment, neither of which most people paid much attention to anyway and even fewer are willing to pay for now.

Now, I don’t want to be too triumphant, I make my living writing for news outlets, but there is little escaping these basic facts.

We can even prove it too. Within an economy the proof of being fit for purpose is that it is possible to attract more resources than it requires to produce whatever it is. Not all that dissimilar to animals really, not attracting enough resources to raise offspring does mean extinction. In business that is money – can’t get in more money than it costs? Then you shouldn’t be there, you are unfit for purpose.

What is the complaint of the newspapers? Not enough people want to pay for them, too few companies will pay to advertise in them, costs are greater than revenues.  The fact the NUJ disagrees – and also insists that any beneficiaries of their ‘windfall’ digital tax should have full NUJ membership – is obvious, in the same sense that turkeys don’t vote for Christmas.  They are insisting that cars be taxed to pay for the red flag man – which is not how civilisation advances at all.

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Tim Worstall works for the Continental Telegraph and the Adam Smith Institute