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"Truth will prevail" was the motto of the Czech and Slovak demonstrators against communist rule in 1989. Once the dead hand of censorship and monopolistic state ownership was lifted, they thought, competition and innovation would do for the media industries what they had done for retail, employment, and other parts of the economy. The ex-communist world would catch up to the "normal" advanced, industrialized countries. The market for information is no different than the market for soap. Leave the media alone, and smart consumers, market pressures, and public-spirited journalists will do the rest. The only people who should fear the power of the free media are wrongdoers.
That was a dangerous, even fatal misapprehension. The soap trade does not attract mischief makers and influence peddlers. The information system does. Information is a weapon—and one that can be used against us. This is an uncomfortable truth for open, democratic societies. Moreover, the media industries—whether in established industrial democracies, in their postcommunist counterparts, or in emerging economies—are far more vulnerable than we realized in 1989.
First, news outlets have faced wrenching changes in their business models, changes that are driven by a technological revolution. Second, features of the media system such as competition, openness, fair-mindedness, and prudence, once seen only as strengths, have also turned out to be weaknesses.
The underlying fallacy here is the idea that the "marketplace of ideas" works well without any externally imposed structure or sanctions. This is not the case even in the market for soap, and is certainly not the case in the market for information. As Joseph Stiglitz, the Nobel Prize–winning economist, noted in the Financial Times:
Much of the thrust of economics over the past half century has been to understand what regulations are needed to ensure that markets work. We have tort laws that ensure accountability if someone is injured and we don't allow companies to pollute willy-nilly. We have fraud and advertising laws to protect consumers against deceptions—recognising that such laws circumscribe what individuals may say and publish.1
Tobacco companies, for example, cannot say that cigarettes are safe. Pharmaceutical companies cannot say that opioids are not addictive. In the financial markets, regulation ensures equal access to information for investors.
All this would apply to soap....