How the Advent of CNN Has Brought the US Government To Its Knees

 

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In my essays, I speak a lot about unintended consequences: the unintended consequences of government policy (rent control, licensing, etc.), the unintended consequences of investor decisions (speculating versus investing for example). However, I want to discuss how the launch of CNN station back in 1980 by Ted Turner has led us to a completely dysfunctional US government and potentially a slow-down in the Canadian economy.

 

Stick with me, as this will be important to the overall performance of your real estate portfolio.

 

The Launch

Back in 1980, Ted Turner had a vision. He saw a gap in the media and information market and decided to risk $20,000,000 to help fill it. So he launched Cable News Network – 24 hours of news. Remember, this is long before we had public internet, long before most people even had access (or even had opinions) on financial issues occurring around the world. In fact, people were getting their taste of news via the morning newspaper and the 6pm news broadcast. Most people didn’t know how the TSX or Dow did that day until 6pm (and then only if the broadcasters decided it was newsworthy).

 

Well, did Ted ever tap into a demand! And that demand begat even further demand. Twenty four hour news cycles mean a LOT of airspace to fill. Fill it they did, but they also discovered that every time there was a crisis (real or imagined), or a dispute, the ratings went up. If the news was slow or just average events occurred, ratings would drop.

 

Then a reality struck at CNN, “We can sell our advertising for more if we have more viewers, so that means we need more crises, more vitriol, and more reason to keep it running in people’s homes every waking hour.” And that became the first…

 

Tipping Point #1

Not only was this the beginning of an increase in real or perceived conflict on TV, suddenly someone in Toronto was hearing about a kidnapping in Oklahoma (subtext: be aware, your kids are at risk), or a bomb going off in eastern Turkey (subtext: you’re not safe anywhere). This heightened the viewers’ alert level, which drove us psychologically to search for more ‘news to keep us safe.’ This was a brilliant business model, but not a brilliant societal model. Inevitably, this led to…

 

Tipping Point #2

Other broadcast companies started to see the results that CNN was creating in the ratings, and so launched their own 24-hour news networks. Now we had even more airtime to fill with messages designed to scare and grab attention. Many of these new hours to fill were mandated to be different stories to the CNN stories so the hunt for scariness widened. Suddenly, stories we would NEVER have heard of and truthfully have zero REAL impact on our lives were pouring into the average living room with the subtext that “This is important – be wary. Watch us and we’ll keep you in the know.” This led to the scariest of all…

 

Tipping Point #3

The politicians, protesters and pontificators (the 3 Ps) discovered the power of this insatiable 24 hour news monster and quickly saw the opportunity to ‘Feed the Monster.’ This is the tipping point that affects you, your country, your province and your real estate portfolio.

 

In order to fit the 24 hour news cycle, “the 3 Ps” had to be noticed. To be noticed, they had to say things with a little more vitriol, a little more controversy, a little more “WWE Wrestling.” At first it started out okay. The 3 Ps filled the new vacuum in a way that the news channels liked and the viewers enjoyed a little more variety.

 

Then it all began to ramp up. The viewers began to tune out as they got used to the cycle and access. This is when the controversial statements became stronger from the 3 Ps. They started to notice that if they went over the top, they would get coverage. Coverage, to the 3 Ps was the industry they were in. So the more they received, the more they won.

 

Shows turned to ‘multi-guest’ yelling matches. Debates with intelligence and discussion were considered boring TV, so the more diametrically opposed the guests on a panel were, the more fireworks would go off. The more fireworks there were, the longer the viewers stayed. This served everyone, so it kept getting ramped up and up and up until it began to spill into the real world. Right around the time internet access became universal.

 

A whole generation of people have grown up in this 24 hour news cycle thinking that:

 

• Debate = yelling
• Discussions = you versus me; not you and me coming to consensus
• Negotiations = I never move from my position and my job is to make yours wrong

 

Welcome To Today

Here we sit today, a result of that launch in 1980.

 

#1 – The internet is FILLED with angry, un-substantiated, un-filtered opinions (just read the anonymous comments on just about any news article or blog post. It’s embarrassing that this is how people have been trained to communicate).

 

#2 – The 3Ps have become so loud and so entrenched that many don’t even know that they are attributing to this societal breakdown. There is no longer a venue for public discussion, it is only entrenched arguments. These arguments may make for good entertainment, but are no way to run a country, an economy or a society. Imagine if you ran your household that way. It would quickly turn into a toxic, unproductive home where yelling over each other would be the only communication (‘cause that’s how they do it on TV). It would become unliveable but if it was all you knew, then it would continue.

 

#3 – It has come to a point where some US new channels themselves have chosen sides in arguments, politics, and policy (as it brings more loyal viewers and, therefore, more revenue). No longer news providers – they have become news creators to the point where they have adopted the 3 Ps mentality by attacking other news channels and those who have different opinions than the station. Some of these stations have moved so far away from “news” that they have become parodies based on giant personalities and ‘gotcha’ moments. Still, the viewers keep coming.

 

#4 – Governments are often afraid to make the tough (and needed) decisions they have been elected to make because even the smallest negative voice will be amplified so as to fit the new societal norm of conflict communications. It has sadly become more fashionable to be against something, rather than for something. The new battle cry: “To heck with the facts, I have an opinion damn it, and it is my right to be heard.”

 

The US Government Shuts Down

This has led us to today’s US government shut down. The job of leading has turned into a job of brinkmanship. Why not? It garners so much more air time for the players than passing bills designed solely to set the stage for a strong and vibrant economy. The leaders have given up leading; they are now even further into what many are calling ‘The Game’ of politics, where wins and losses are measured on the floor of the house where cameras can make a big deal of the outcomes. You can see it any time of the day on some news channels: posturing, sound byte statements and false anger/disgust. When I see this, it often reminds me of the Shakespeare line from Hamlet:

 

“The lady doth protest too much, methinks.” Whenever someone is so adamant in their protest, inevitably they are either hiding something, or have very little substance to their argument and think volume of argument will help them win the day.

 

 We Don’t Help Our Leaders Lead

Sadly over the decades, our elected and corporate leaders have been trained to believe that they cannot change their mind even after they have discovered new facts or have had a reasonable and measured discussion with others who might be at the effect of their decision.

 

Why are they no longer able to feel comfortable in adjusting their opinion or their policy? Simply, because society seems to abhor that. In fact, people who do use reasoned analysis to change their mind are labeled with the horrible moniker “Flip Flopper”, which in today’s society equals being weak.

 

Even if it makes good societal sense to change direction, they can’t. What a sad situation in which we find ourselves. And this is the main reason that the largest economy in the world is so dysfunctional, and that the leadership has no path to find their way out of the mess AND save face at the same time.

 

 What Can We All Do?

It has taken us 33 years of slow societal change to get to this place where anger and loudness rules, so don’t expect it to change overnight. But it must. Average, intelligent citizens must begin taking back society by simply refusing to get involved in the vitriol; we must relearn how to communicate different sides of an issue without ramping up emotions or drawing lines in the sand. Truth is, life is not black and white – there are many, many shades of grey (far more than 50) in between these two extremes.

 

It will take time, but slow incremental progress for us all can make it happen. I am sure you have spoken with many people who are tired of this path. Some may call us dreamers, or out of touch with the ‘new reality.’ That’s fine. In 1980 they couldn’t see the launch of a new station leading to the shutdown of the US government. But maybe, just maybe, this shutdown will be the next tipping point, sending us back to a more civilized civilization. We won’t know for a couple of decades, but it can be, and quite frankly should be.

 

That is the Future – What About Today’s Situation?

The reality is today we are dealing with what we have. The 3Ps have taken over the world’s eyeballs and ears. Step one is always in the acknowledgement of the problem. So let’s deal with what this means.

 

Soon you will receive a link to an interview where we discuss how the US Government shutdown and more importantly the debt ceiling legislation could affect our overall housing market here in Canada (and even in certain parts of the US). We’ll be analyzing the current, and more importantly, future impact of the mess down south.

 

Yes, it will have an effect on Canada, but probably not in the way most people are thinking. For some, it will be good, and for others, a disaster. These include: tax changes, cross border ownership changes, export demand changes (both up and down), Canadian dollar direction and even long term interest rates.

 

Watch for that discussion coming soon. But as you wait, please make a small, yet subtle, change to not be drawn into it any more. Feel comfortable with looking at both sides of an issue before forming an opinion, and even after that opinion is formulated, if new information arises, don’t be afraid to adjust your approach. And most importantly don’t let the 3 Ps rule how you look at the world; they are not in it for you, they are in it for your attention.

 

began his investing career in 1985 with a house purchased in Mission, BC. He is Founding Partner and Senior Analyst at The Real Estate Investment Network and currently owns nearly 200 doors in BC and Alberta. A seven-time best-selling author, Don’s expertise and passion for teaching Canadians how to create wealth through real estate are far-reaching and have made an impact on the lives of thousands. You can follow his daily thoughts on Twitter.