DAVID CARR
ESSAY


Every modern recession includes a media discussion about how horrible things are and how much worse they will be, but there have never been so many ways for the fear to leak in. The same digital dynamics that drove the irrational exuberance - and marketed the loans to help it happen - are now driving the downside in unprecedented ways.

The recession was actually not officially declared until early December, but the psychology that drives it had already been e-mailed, blogged and broadcast for months.

The other day, I got in a cab and there was a news report on the back seat television about soaring unemployment in New York. An infoscreen on an ascending elevator ride in Manhattan suggested that we were all only going one way-down. The news zippers in Times Square were full of reports of crumbling consumer confidence .

“When everyone is talking about recession, we all feel like something has to change, even if nothing has changed for us,”said Dan Ariely, author of “Predictably Irrational,”a book that explains why people do things that defy explanation.“The media messages that are repeating doom and gloom affect every one, not just people who really have trouble and should make changes, but people who are fine. That has a devastating effect on the economy.”

With unemployment, auto sales, home foreclosures and consumer confidence in the United States all at historic levels of distress, news outlets are hardly making it up. But the machinery of the economy began to freeze in place far more quickly than it has in the past, in part because so much scary data is circulating so much faster than it used to. This recession got deeper faster because we knew more bad stuff quickly.

“Our collective hive-mind gets into a tizzy over other things that suddenly zoom into focus,” said Xeni Jardin, one of the editors of the blog Boing- Boing.“It’s a hurricane! OMG, salmonella in the hamburgers! Wait, we’re all fat! There is an escalation of attention that feeds itself, because this recession is appearing throughout all forms of digital human expression. And unlike any of those other topics, this affects everyone.”

Nobody fears getting caught in a down cycle more than those who run public companies, and defensive layoffs - not based so much on current realities but on horrors to come - have become the norm.

Speaking at the Reuters Media Summit recently, Barry Diller, the chief executive of IAC/ Interactive, chided the leaders of entertainment companies for the kind of panic and greed-driven right-sizing that was anything but.

“The idea of a company that’s earning money, not losing money, that’s not, let’s say,‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level,” he said.“First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger, unemployment heap for frankly no good reason.”

Media companies have been hammered during a recession because they run on advertising, a discretionary expenditure that always is among the first things to go. Viacom had third-quarter earnings of over $400 million in 2008, down 37 percent compared with the same quarter last year, but it was still nicely profitable. Nonetheless, the company laid off 850 people.

Michelle Rabinowitz, a producer at MTV News, was one of them. A Web and pop-culture savvy journalist , she is, at 28, just the kind of talent media companies fought over in the last couple of years and will again in the future. But for now, they’re dumping bodies off the back of the truck.

“A lot of young people had to find jobs after 9/11, so we know about tough times, but at least we know what that was about,” she said.“I go outside and the sky is not falling, but my job is not there, the value of the apartment that I bought is not there, my 401(k) is not there. It’s weird, it’s like somebody made a bad decision somewhere - the Federal Reserve, a media company, an executive, who knows- Everything sort of looks the same, but everything has changed.”

There is a kind of emotional contagion. James H.Fowler, an associate professor at the University of California, San Diego, recently co-wrote a study looking at how happiness can be spread among friends. The opposite is true as well.

“There are studies on bank runs, and it shows that people who know others who have taken their money out of the bank are much more likely to do it as well,” he said.“We always overshoot the upside and, because of the same contagious effects, we overshoot the downside. Everything is fine, and then all of the sudden we are looking for water and supplies to ride out the coming storm.”