Chapter 13: The Press, Market Ideologies and the Irish Housing Crash
There is a growing symbiotic relationship between big business, communication networks and the mass media. Business depends on communication networks and the mass media in numerous ways; in the actual conduct of business, in the need for market information, for advertising and market creation and as ideological apparatuses that act to naturalise market economies and defend business interests. Such trends have been exacerbated in the media industry in recent decades as media has been increasingly consolidated into massive transnational corporations with interests far wider than journalism. In fact, it is argued that the contemporary mass media, rather than simply reporting on economic issues, have become an integral part of economic processes.
A clear example of this and of the growing links between business and journalism is the coverage of housing and the property market in Ireland. In 2007/2008 the Irish property market suffered one of the greatest crashes in modern history, eventually costing the state tens of billions of Euros in bank bailouts and hundreds of thousands of mainly working class livelihoods. A key discursive element of housing and property news has been the framing of housing as a commodity rather than a social need, as well as a privileging of market needs over society ones. This was the case in much of the coverage of the housing market by the Irish media in the run up to the housing crash of 2007/2008. This framing, as well as ignoring key social problems such as affordability, included an insidious and dogmatic belief in the primacy of the market that blinded much of the Irish media to the possibility of the crash, thus acting both to encourage and elongate the bubble. There is little evidence that this framing of housing as a commodity rather than a social need has changed; most discourse continues to be around ‘fixing the market’ rather than thinking outside of it.
The Irish Housing Crisis
The roots of Ireland’s economic crisis are long and deep. Ireland after independence remained a dependent economy, concentrating on the export of non-value-added commodities and the enticement of foreign direct investment into the Irish state, rather than the development of indigenous industry. The service economy and the various sections of the property industry became key, state-supported investment activities during the ‘Celtic Tiger’s’ boom years. This led to serious repercussions for many Irish people struggling with a diminishing social housing supply, a Dickensian private rental market and now unaffordable homes. The process also led to a skewed domestic economy and eventually to the development of a massive asset price bubble in property.
By 2007, even middle-class home buyers were being priced out of the housing market. The deregulated banking system filled the gap with innovative ‘products’ such as speculative ‘100 percent loans’, ‘interest-free mortgages’ and ‘buy to let’ schemes. At the same time that consumer demand was dipping, huge amounts of vacant and half-finished properties were coming on stream, often in places with no manifest demand for housing at all. Like all Ponzi schemes (which the Irish property market had begun to resemble), the market was fictitious. Eventually in 2007, property prices began to dip. Following the ‘credit crunch’ the residential and commercial property markets collapsed entirely. This then uncovered huge holes in banking balance sheets, none larger than those for the poster boy for Irish ‘entrepreneurship’ and ‘innovation’, Anglo Irish Bank. However, unlike an ordinary Ponzi scheme, this crash brought down a whole generation of home buyers, the Irish economy, hundreds of thousands of jobs and the living standards of most of the populace.
The crisis in housing has continued since, despite the apparent upturn in the Irish economy. Thousands of people continue to be unable to pay mortgages, often trapped in negative equity (Finfacts Ireland 2013). Public and private investment in new housing remains low (O’Brien 2014b). Private rents continue to rise well above those of inflation or average incomes, especially in Dublin. Unsurprisingly, by the middle of this decade, the city witnessed an unprecedented wave of evictions of individuals and families unable to pay, and we have witnessed what has been termed a ‘tsunami of homelessness’ (O’Brien 2014a; Kelly 2014).
The Irish Business-Media Nexus
The Irish media sphere is becoming increasingly linked to international investor and political interests. Three distinct trends have developed fairly recently: The first is the consolidation and concentration of Irish media groups; second is increased foreign ownership and penetration; and third is journalistic practice affected by technological change (Horgan, McNamara, and O’Sullivan 2007, 35). The prominent broadcaster RTE, although state-funded, is also dependent on advertising revenue. Within the print media sector, the multinational Independent News and Media (INM) group has developed a dominant position. Its interests range across Irish national, evening and Sunday titles, as well as across the regional market. INM titles represent over 40 percent of all daily and Sunday national newspaper sales in Ireland (Flynn 2013). The company is currently attempting to take over the Celtic Media group, which if successful will mean INM have control of no less than twenty-eight regional titles (National Union of Journalists 2016).
However, the connections between Irish news media and business—most particularly finance—are widespread and entrenched, as a study of Irish director and board networks (2005–2007) has shown (Clancy, O’Connor, and Dillon 2010). Through this network, Independent News and Media directly interlocks with Allied Irish bank, Eircom and other interests. Indirectly, this ‘director network’ places INM close to the heart of Irish capitalism, which raises the question of absolute neutrality or objectivity in reporting on the Irish economic crisis. Moreover, INM’s major shareholder, Denis O’Brien, has huge interests in Irish private radio and international telecommunications, as well as an overly close relationship with Ireland’s ministry of communications (Irish Times 2011). His radio holdings include two national radio stations, one of which, Newstalk, supplies news to the UTV group of radio stations.
RTE also has connections with the financial oligarchy such as former RTE chairman Patrick J. Wright (who was also a director of Anglo Irish Bank throughout the boom years), and Mary Finan (who was a director of the ICS building society). Although Ireland’s ‘newspaper of record’, the Irish Times, is a trust, it too has connections with finance capital. For example, David Went, the former chairman of its board of trustees (2007–2014), has also been chairman of Irish Life and Permanent, chief executive of Ulster Bank and a non-executive director of Goldman Sachs (Mercille, 2013b).
The Irish News Media and the Property Crisis
The Irish media system, especially the press, played an important role in the Irish property bubble and following crisis. Newspapers are one of the main sources of market information and act as the main advertising source for property companies. Newspaper groups have also adapted to the online advertising challenge by using their websites as portals in property listings (e.g., the Sunday Business Post and the Independent) or even by buying up property websites. The Irish Times, for example, purchased http://www.myhome.ie in 2007 for €50 million (RTE 2007). Newspapers are also an important source of information on the property market, property sales and planning issues.
Although there is some evidence that some minor elements of the news media did ask questions about the property bubble, the wider evidence suggests they most often took a cheerleading role. RTE, the Irish public service channel (and arguably the only media company not overly dependent on property advertising), did belatedly produce a documentary on the possibilities of a housing crash (RTE/Animo Productions 2007). One important article was published as an opinion piece in the Irish Times in December 2006, written by the academic Morgan Kelly (Kelly 2006a). The op-ed piece, and the academic paper it drew from (Kelly 2006b), did warn in no uncertain terms of the oncoming crisis.
Newspapers and editors have also defended their roles. For example, former editor of the Irish Independent Gerry O’Regan maintained in his evidence, to a government tribunal on the banking crisis, that there was no ‘hidden agenda’ to ‘artificially bolster the property market’, while former Irish Times editor Geraldine Kennedy claimed that the property sections in the newspapers maintained the same level of editorial standards as were applied to the rest of the paper (TheJournal.ie 2015). Tim Vaughan, former editor of the Irish Examiner, stated: ‘“If we were guilty of anything, and I believe we were, it is that we believed and accepted that institutions, such as the financial regulatory authorities, were doing their jobs and doing them competently with due diligence and with appropriate compliance policies, and with proper political and departmental oversight”’ (Hilliard 2015).
At the same time, the RTE documentary and Kelly pieces were widely derided across the Irish press (O’Donoghue 2007). The Taoiseach himself infamously made clear his sentiments towards those who ‘talk down the economy’ in a public speech (Finfacts Ireland 2007), declaring, ‘Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don’t know how people who engage in that don’t commit suicide’. Alongside its documentary, RTE also produced a reality TV series in which an estate agent turned presenter shamed the populace into the property ladder, in the insidiously named I’m an Adult, Get Me Out of Here! (RTE/Animo Productions 2007). RTE also produced and broadcast standard property improvement reality television shows and more recently began running a ‘property porn’ series entitled Home of the Year, sponsored by the Permanent TSB bank (RTE 2015).
Thus far, there has been little discussion about the news media’s role in the property bubble in the Irish mass media itself. The media did get a dishonourable mention in the 2011 Nyberg Irish state report on the Irish housing crash (Nyberg 2011, ii, 6, 50). The media’s role is also being investigated by the state inquiry into the banking crisis (see Critical Media Review 2015 for video of inquiry proceedings).
In addition, there is a small but growing area of academic research into the role of the media in the Irish economic crisis (Fahy, O’Brien, and Poti 2010; Cawley 2010; Preston and Silke 2011, 2014; Mercille, 2013a, 2013b, 2014). Cawley’s (2010) study found that news coverage framed the public sector as a cost while presenting the market economy as the sole ‘reality’. Preston and Silke (2014) argued that the media took part in an ideological re-framing of what was a private banking crisis into a fiscal crisis, which then helped lay the political justification for severe austerity measures (see also Mercille 2013a). Mercille (2013b, 2014) found a hugely favourable view of the property market before 2008, which helped sustain the rise in house prices. Some of my own PhD research, on financial journalism and the housing crash between 2007 and 2009, supports these studies and is discussed ahead (Silke 2015).
The Role of the Irish Times and the Irish Independent in the Property Bubble
As part of a doctoral thesis, I investigated the Irish Times’ and the Irish Independent’s coverage of issues around housing and property between May 1 and May 25, 2007. This period coincided with the start of the drop in house prices and the May 24 general election. This election was probably the last major opportunity for debate in the ‘public sphere’ on the property bubble before the crash, and certainly it was the last opportunity for people to vote before the crash. The key search words ‘property’, ‘housing’, ‘stamp duty’, ‘rent’ and ‘mortgage’ were used to find articles from the Irish Times and the Irish Independent in the Lexis Nexis database. Altogether in the Irish Times, 446 relevant articles were found between the dates in all four sections; in the Irish Independent, 410 relevant articles were found.
Business and finance
Opinion and editorial
Table 13.1: Total number of articles featuring property or housing, May 1–25, 2007
As shown in table 13.1, the Irish Times and the Irish Independent gave approximately equal attention to the issue and generally in the same manner. Most articles in which housing or the property markets were discussed appeared in the property supplements, followed by the news sections, then closely by business sections and finally by opinion and editorial. This in itself suggests that housing is treated as a commodity, being discussed predominantly in the business and advertising sections rather than elsewhere.
In the coverage of property in the Irish Times and the Irish Independent, a key finding was the dominance of elite sources connected with the property and finance industries as compared to ordinary sources, such as home buyers and renters. The greatest total single overall source on the issue of housing is comprised of estate agents, accounting for some 28 percent of total sources and 29 percent of sources by frequency. In the residential property sections, 64.5 percent of sources in the Irish Times and the Irish Independent are estate agents, while in the commercial property sections estate agents make up 72.5 percent of sources in the Irish Times and Irish Independent combined, 78 percent in the Irish Times and 65 percent in the Irish Independent. In the combined business sections, banking and finance sources make up 35 percent of sources, while property industry sources (including estate agents) make up 13 percent.
In the news sections, official sources, especially politicians, are most prevalent, with 69 percent of total sources. Seventeen percent of articles also included sources from the finance and property industries. In party political sourcing, the parties with pro-market polices make up the vast majority of sources in the papers, although it may be argued that this reflected party political support at the time. When compared, the Irish Independent and the Irish Times have a roughly similar ratio of party political representation. Economically right-wing political sources make up the majority, with approximately 65 percent of representatives being openly free market parties (Fianna Fail, Fine Gael and the Progressive Democrats). If we include Labour, which had a 2007 policy of subsidising the market by offering large grants to be used to buy private housing, then the number would go up to approximately 77 percent. Representatives of parties that call for non-market solutions to housing make up just under 9 percent of sources (Sinn Fein, the Socialist Party and People before Profit Alliance), while the Green Party, which called for stricter market regulation, comes in at 10.5 percent. Most party political sources appeared in the news sections.
The most striking figure is that of what we term ‘use value’ sources—that is, sources such as renters and home buyers who are interested in a property solely for its use (i.e., to live or work in it). ‘Use value’ sources make up only 2 percent of total sources and appeared in only 2 percent of all articles. In comparison, ‘exchange value’ sources (from the property and finance industries) make up 43 percent of total sources and appear in 44 percent of all articles.
This overly skewed sourcing could be described as a manifest ‘capturing’ of the press by property and finance sources and may help to explain the downplaying of the oncoming crisis and the lack of critique of the massive inflation of the cost of housing, as will be discussed ahead.
Treatment and Framing
Research also documented an overall market-orientated frame around property; that is, housing was primarily looked at from the point of view of the market rather than society. Elements of this viewpoint included the privileging of ‘exchange value’ over ‘use value’ and non-critical reporting of markets and market sources. For example, although corruption on housing issues such as rezoning was heavily covered in the news sections on the political side, the industrial side of the corruption was completely ignored, and corruption itself was not covered in business or property sections of the papers. Similarly, the state was either presented positively when serving market aims or blamed as a cause of instability in the markets.
The residential property supplement in both newspapers displayed an uncritical, aspirational and advertorial discourse when reporting individual properties. At times, advertorial type articles also find their way into the business and news sections. Not one article questioned whether an individual property might be overpriced. Overall, even in the main news sections, the key issue was ‘the market’ and ‘market stability’, rather than either consumer or social good. In the property and commercial sections, the rental property market is framed from the perspective of landlords and investors. Even social housing is framed on a market basis from the point of view of private companies or developers involved in the supply of public housing. In op-ed articles, market stability was the major issue, again trumping the crisis of affordability or the social need for housing. The only questioning of rental prices was from the point of view of business, focusing on the danger of wage demand inflation arising from higher rents.
The discussion of state policy played into the neoliberal trope of state ‘interference’ distorting a functioning market. Material issues such as overproduction and price inflation were ignored, and assumptions of market self-regulation (without state interference) appeared implied. This is an important finding as it reflected the neo-classical economics viewpoint that markets work and are self-regulating and that the crisis came not from markets themselves but from behavioural, psychological and political interferences. Again, given the non-critical sourcing of both papers from orthodox neo-classical economists and the lack of any evidence of independent fact-checking or investigation, this is probably not surprising.
Both newspapers acted defensively when it came to the question of future property price trends. Both privileged a market slowdown (in positive growth) rather than a crash, with many articles denying that house prices themselves would be affected. The business sections especially acted to play down the dangers of a crash, with some articles even going so far as to attack those who said otherwise.
Many articles considered the problem to be political interference, specifically over stamp duty reform, and expected a post-election ‘normality’ to resume. This framing held the direct implication that the markets, left to themselves, would be fine, while ‘interference’ from government and even discussion itself was the problem. This was seen clearly in critical responses to anyone ‘talking down the economy’; any critique was itself blamed for causing the crisis. At best, this response ignored the material basis of the property market crisis; at worst, it both silenced critics and elongated the crisis.
Research demonstrates that Irish newspapers covering the property industry did not report objectively or fulfil their public interest ‘watchdog’ role. Rather, their key function was to act as advertisers for the industry, facilitating exchanges of uncritical information among industry players. In the process, they normalised the hyperinflation of housing, celebrated high property prices and, crucially, acted to play down the contradictions in the Irish system that were directing it towards a crash. With some exceptions, particularly in a few opinion pieces, they reported not for the public but instead for rather narrow sectional and economistic interests. The main reporting patterns and frames point to a ‘captured press’—that is, a press in the service of a narrow, elite class-based interest, operating under key structural, institutional and ideological biases.
A key element of this process was the framing of housing not as a social need but as a commodity, used to create wealth rather than supply homes. This celebrated rather than questioned the hyperinflation of housing and rental costs. The market-orientated framing also supported the neo-classical and idealistic belief in market self-regulation, either denying or playing down the possibility of a crash. The lack of critique may well have helped to both build and prolong the bubble itself. That is not to say the media caused the crisis; there were long-term material and political structural issues at its core. However, the newspapers did play the role of facilitator, supplying ideological and political cover to an economic elite that profited greatly from the hyperinflation of housing and the sale of associated financial products. This assisted in laying the grounds for the housing crash, the economic crisis and the subsequent financial bailout, alongside the severe austerity policies that then followed.
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