Can Journalism Be Saved? A Tax Credit System for Creative Work9th March 2019
The latest round of layoffs at Buzzfeed, the Huffington Post, and other major news outlets has raised new questions about the future of the traditional model of advertising supported journalism. While a small number of news outlets, like the New York Times, continue to thrive, few others seem to be profitable in the current environment.
This raises the prospect of a future in which there will be ever fewer reporters to keep the public informed and to scrutinize the actions of public officials and regulatory agencies. While we all recognize the inevitability of abuse and corruption with a regime that bans a free press, we will get the same outcome in a world where the market is structured in a way to make the operation of independent media difficult or impossible.
We can look to structure the market in a way that overcomes this problem. Specifically, we can have a modest individual tax credit ($100 to $200 per person) that can be used to finance journalism and other creative work.
The basic problem faced by news outlets, and other producers of creative work, is that the Internet has made it possible to transfer written material, as well as recorded music and video material, at near zero cost. This means that the condition loved by economists, with the price being equal to the marginal cost, implies that this material would be available for free. If users pay what its costs to deliver a news article, song, or movie over the web, they would pay nothing, leaving no money to support the workers who produced the material.
This problem is not altogether new. The point of a copyright monopoly was to allow the creator of a creative work to charge a price that was well above the marginal cost of transferring material. However, the Internet makes this problem far more serious with the cost of transferring material falling to zero and copyright enforcement becoming ever more difficult. In this context, it makes sense to look to alternative mechanisms.
A tax credit for supporting creative work should not be seen as an altogether new concept. This can be viewed as a variation on the tax deduction for charitable contributions. Under this system, the government effectively subsidizes any charitable organization a taxpayer chooses to support.
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