Non-Profits are Morally Not Superior to For Profits

Innovation has changed the way news is reported.  No longer do we need to wait for the evening news to learn of important events in our nation and community or the daily newspaper for more detailed information.  News is reported near instantaneously on the Internet.  Such innovation has challenged the survival of newspapers and many are failing.  President Obama game voice to aspects of the innovation that some find disconcerting (Michael O'Brien, The Hill, "Obama open to newspaper bailout bill"). 

Obama said that good journalism is "critical to the health of our democracy," but expressed concern toward growing tends in reporting -- especially on political blogs, from which a groundswell of support for his campaign emerged during the presidential election.

"I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding," he said.

New legislation proposes allowing newspapers to form as tax exempt cooperatives that has at least drawn the president's interest.

Sen. Ben Cardin has introduced S. 673, the so-called "Newspaper Revitalization Act," that would give outlets tax deals if they were to restructure as 501(c)(3) corporations. That bill has so far attracted one cosponsor, Cardin's Maryland colleague Sen. Barbara Mikulski...

The president said he is "happy to look at" bills before Congress that would give struggling news organizations tax breaks if they were to restructure as nonprofit businesses.

The senators and the president miss two important points: profits provide great incentive to produce high quality, low cost products and for non-profit are not morally superior to for profits because they will either have incentives that imitate those of for profit firms or will not perform efficiently.