The Giant Lilliputian Bank and Things I Learned the Hard Way

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In an imaginary country – let's call it Lilliput – certain enterprises attained special size and status over the years and decades. One of the units formed "to battle the giants" was the army of Lilliputians. It employed tens and hundreds of thousands of brave Lilliputians, who prepared for the attack of the giants.

A second body was the "Giant Lilliputian Bank," which, like the army, employed tens of thousands. It managed hundreds of billions worth of lilliliras. The GLB helped itself to a small commission – a mere 1% of each transaction, loan or deposit. But the commissions stacked up to tens of billions of lilliliras. And there were several dozen more bodies like the bank and army, each of which employed thousands of Lilliputians.

One day, the Lilliputians woke up and discovered that Lilliput had changed. Social solidarity had crumbled, together with the quality of life. Inequality had grown, corruption had spread and young Lilliputians started to talk about leaving.

A number of dismayed Lilliputians got together to brainstorm. One said, "Our problem is that we have lost the sense of solidarity we had when Gulliver was plaguing us. Now every 'Putian and organization is out for himself. Our leaders, who're supposed to take care of everybody, have ties to the army or big business, and everybody's terrified of the Giant Lilliputian Bank. So they'd rather hunker down and prepare for the attack of the giants rather than confront the rotten economic and social structure created here over the decades."

"I have an idea," added a second. "We need to organize all the Lilliputians who don't benefit from the way things are now, the ones carrying the burden and suffering from inefficient resource allocation. Inequality isn't a divine decree, it's the result of economic and social norms and structures."

The young Lilliputians applauded, each raising an idea for reform. They spent the evening happily concocting plans. But as the moon rose and night waned, the old man of the tribe arose and spoke. "Nifty ideas. Kudos for the energy and good intentions, but it won't work."

Then he explained the facts of life.

1. The numbers are against you. Say our army costs 20 million lilliliras more each year than it needs to. That's a lot, but it's shared by all. Each Lilliputian pays 2,000 lilliliras a year on army waste, which is less than 200 lilliliras a month. True, that's no small sum, but nobody's about to strain himself to save 200 lilliliras a month. They'll wait for somebody else to do it, and you'll hear the same reaction with every one of your ideas for reform, or competition against the Giant Lilliputian Bank. It may charge monopoly tax of 10 billion lilliliras, but that's just 80 lilliliras a month per capita.

2. Your enemy is big and organized. While you can barely find the door and have no resources, you'll find yourself up against the army, the bank and the other powerful, organized and clever monopolies. You'll find that all the information about giants threatening us is guarded fiercely by the army, and the information about banking is held by the Lillibankers. Not only will the Lilliputian in the street have zero interest in joining you; they won't buy your ideas, either.

Well before you reach the legislator with your reforms, before you get mowed down by the lobbyists, the politicians with ties to the monopolies and their pet press, you'll discover that people are terrified of change. They cling to the status quo. The other side – small, relatively homogenous groups – will have the information, the organizational ability and mainly terrific economic incentive, not the general population.

While each Lilliputian family doesn't stand to earn much from the reforms, on the other side, their loss stands to be enormous. So the amorphous general public is always structurally inferior. Its superiority in numbers doesn't work in its favor, because any gain must be shared with millions. That works against the people's motive.

3. The ignorance of most Lilliputians regarding Lilliput's economic structure and the way they're screwed by the system is perfectly rational. Since the cost of obtaining information on the economy is enormously expensive, and each individual Lilliputian has very little influence, pursuing reform is an enterprise with no discernable economic reward. Put otherwise, it would be irrational.

And thusly the old man spent the night talking about the lobbyists of the powerful organizations, about the regulation they usually manage to neuter, and about academics biased toward money and power.

Objectivity, a lame excuse for the press

And now let's look at the state of the press in Israel.

Even though Lilliput is imaginary, its story has something to do with us.

The good news is that since the social-justice protests in mid-2011, something good happened to the press. The hundreds of thousands of people who took to the streets changed the narrative that had ruled most of the press for years – that our economy and society were a model for emulation, and that if we could just solve the problem of the ultra-Orthodox Jews and Arabs, settlers and left-wingers, we'd be Startup Nation.

The even better news is that the press can theoretically solve some of the problems described above by our Lilliputian elder. A strong, independent press can do three things the general public can't:

1. Collect and analyze information that the strong interest groups don't want made public.

2. Make the information interesting and relevant so the public will invest in learning it, even though ignorance is rational, as explained above.

3. Disseminate the information, enabling the public to organize and take action for a common cause; or vote for truly reform-minded politicians.

The bad news is that the press is unlikely to undertake the role of agent of change. Mainly, because most of the press suffers from the same illnesses our elder described. The information they process comes mainly from the interest groups, and they are generally not motivated to embark on protracted, painful battles that will gain them nothing but enemies.

Worse, many figure that this isn't their function. The press should report, they say, not have an agenda – it has to be "objective." Politicians and activists should be the agents of change, they say.

Lobby, but no counter-lobby

But it isn't so. The press' most important function is to be an agent of change. There is no such thing as "objective" reporting: every word in a newspaper reflects certain perceptions and values. It may be deliberate or default, open or concealed, but it is the agenda that the editor chose.

Also, when the press tries to be "objective," that means it's preserving the status quo, and is tilted by definition toward the powerful.

Against the army of economists and ex-generals, the general public doesn't have a counterforce of tens of thousands engaged in collecting information. There is no counter-lobby claiming that Israel needs a small, smart army. A newspaper that brings the "army's response" to events is preserving that imbalance.

There is no lobby to counter the bankers; there are proponents of reform, but they are small and weak. A paper giving the bankers equal space to explain why reform isn't necessary and competition isn't either is sustaining the imbalance in favor of Big Money and special interest groups.

The most important job of the press is to present other ideas and to collect information on behalf of the millions of unorganized.

This newspaper battled for years against institutional corruption, gray ties between big money and politics, economic concentration, and the shadow shrouding the defense budget. We supported reforming gas royalties and the mobile communications market. We were accused of having an agenda, and were told that our battle would only be legitimate if it were "objective."

But that claim is based on failing to grasp the nature of the playing field.

Israel doesn't have millions or even hundreds of people who get up in the morning with an agenda to collect information about the monopolies, the ties between money and power, and the rest, let alone to analyze that information. The public suffers from all that, but gets up in the morning and goes to work. Nobody even contacted TheMarker and asked us to handle concentration in the mobile or banking industries, or to tackle defense spending. Naturally, nobody brought us studies or organized information.

On the flip side, the bankers, the big borrowers, the car importers, builders, CEOs, union chiefs, teachers, farmers and the rest never came up with any ideas to improve the lot of the masses. Only ideas to improve their own lot. They have the resources to find information that serves their case.

Why I get pessimistic sometimes

The press and reporters want to be loved, by their sources, advertisers, friends, publisher and readers. People who want to be loved suggest reforms funded by the nameless taxpayer or consumer, not by a specific interest group. Or they can choose a pet interest group, and demand that a different group change.

A paper choosing a third path, that tries to bring ideas for change that represent the general public, finds that the public couldn't care less about its ideas. It suffers from rational ignorance. The interest groups, which aren't ignorant or apathetic, recruit experts, wail that the ideas for reform are lunatic, threaten crises.

"Freedom of the press" isn't about the ability to critique the government. Israel's government, like that of most democracies, is weak and subordinate to corporate giants, banks and special interest groups. "Freedom of the press" is the freedom to critique the giant business players and their satellite industries – from lobbyists to lawyers, who often have ties to the media.

It is terrifically difficult to obtain information that doesn't serve the interest groups and status quo, and the politicians don't want it either, preferring the powerful, scary interest groups to the disorganized greater good. It takes years. Driving home the message can take much repetition, and can conflict with the most basic journalistic instinct – to bring fresh news, scoops. Interest me. Don't keep harping on the same old theme. We have to struggle to survive and would like some fun, too. Speak to us in no more than 140 characters.

Since TheMarker's establishment 13 years ago, a large team of reporters has tried to behave otherwise, to battle the structural obstacles. It hasn't always worked. But when it does, and it has time and again in recent years, it gives rise to optimism.

The little man doesn't have much power against the monster conglomerates and their legions of lobbyists.Credit:

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