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Gresham's Law: How Bad Info Beat Good, Made Fox and Rush Rich, and Ruined the GOP

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Imagine if counterfeiting suddenly became legal. Say we asked people not to do it -- but there would be no penalty if they did.

What would happen?

Simple: There would be an explosion of fake money. If people could buy things with currency worth nothing more than paper and some ink, many would of course do just that.

So con artists would print up more and more counterfeit bills, which would start to take over from real money.

A venerable principle of economics explains why this happens. It's named Gresham's Law, after 16th century financier Sir Thomas Gresham. I first learned about it from my friend (and -- disclosure -- client), Zach Friend, who describes it in his new book on effective communications, On Message.

The short version: Since sound money is expensive, and bad money is cheap, bad money proliferates and drives good money out of the marketplace.

More recently, economists and sociologists have extended Gresham's Law to information: Bad information drives out good, and for similar reasons.

This is what has happened with information in the age of Fox News, Rush Limbaugh and their ilk.

Believe it or not, there was time when they wouldn't have been allowed just to make stuff up all day long, without presenting opposing viewpoints. That time was before 1987, when the federal Fairness Doctrine was eliminated (I summarize the history below*).

Since then, Fox and Limbaugh, plus Glenn Beck, Michael Savage, Alex Jones and other shame-free hucksters, have had a license to, in effect, print money. They do it by inventing alarming falsehoods that frighten and outrage the unwary, drawing big audiences and lots of ad dollars.

Thanks to this business model, we've learned that President Obama is a Kenyan-Muslim-Socialist-Nazi-Gay-Terrorist who is bent on wrecking capitalism, ending freedom, confiscating guns, giving white people's money to lazy black people, opening the borders, euthanizing senior citizens, and putting conservatives in concentration camps run by FEMA, all while apologizing for America to the rest of the world.

Some or all of which is sincerely believed by many Americans, thanks to the aforementioned, shame-free hucksters.

Who, again, get to manufacture this crap, for free, all day long, and sell it at a big markup.

The truth, meanwhile, is expensive. It requires research, multiple sources and fact-checking -- and it often turns out to be kind of boring by comparison.

Like, the president is "a decent family man [and] citizen that I just happen to have disagreements with," as John McCain once said, in a forlorn voice from another time.

Bad information drives out good, like bad money drives out good (and like Sarah Palin drove out John McCain). It's making some folks very rich.

But it's not doing any good for the Republican Party. Because, thanks to all the snake oil, the party's base is now high on it, living in a full-time hallucination. That's the one in which a law aimed at providing affordable health care will literally "destroy America," as Tea Party Congressman Paul Broun of Georgia, for example, appears to fervently believe.

And because the base now has some real political power, thanks to the Internet and a huge boost from the billionaire Koch brothers, the sane part of the GOP now thinks it has to act as if the hallucination were true.

Hence taking the government and the economy hostage over a doomed demand to defund Obamacare. Hence giving the wheel to a freshman senator who does a disturbingly convincing impression of a sociopath.

Hence record-low poll numbers.

Counterfeit information, it turns out, does have a high cost. It's just that the counterfeiters don't have to pay it. In this case, that burden is borne by their party.

And, much more seriously, by their country.

*The federal regulation called the Fairness Doctrine was enacted in 1949. It required broadcasters both to present important and controversial topics, and provide time for opposing viewpoints.

It was based on the idea that the public owned the airwaves. Broadcasters had licenses to use this public property, but not to abuse the owners by misleading them.

But that rule went away in 1987, as part of deregulation under the Reagan administration. Conservatives thought the Fairness Doctrine impinged on free speech, and that free market competition would take care of fairness.

Unfortunately, the effect was like removing all guarantees behind a currency.

Peddlers of information were now free to sell fiction as fact, like counterfeiters printing their own money.

What do you know, since 1987 right wing talk as become the dominant US radio format. Further deregulation made the format particularly lucrative, by enabling the formation of conglomerates like Clear Channel, which could pay big syndication fees to the most popular hosts, led by Rush Limbaugh.

Meanwhile, there was a dramatic rise in the number and popularity of cable and satellite TV channels. This meant that big profits can be made from channels with specialized programming, such as movies, sports, cartoons -- or even provocative bunk masquerading as news.