If you wanted a quick introduction to the economics of journalism in today’s world, Malcolm Turnbull’s lecture last night at Melbourne University’s centre for advanced journalism would be a good place to start. There’s a report in this morning’s Age and an extract as an op-ed; if you’ve got bandwidth to burn you can watch the whole thing here.

Turnbull clearly and carefully explained the central problem facing the media: that although there is as much demand as ever for good journalism, the old model of how to pay for it has collapsed and no one has yet worked out a new one. And since journalists have to eat (and drink, as he pointed out), it’s not obvious how they can be sustained for the future in sufficient numbers to produce a quality product.

Without saying so in quite so many words, he suggested that corporate executives who claim otherwise — such as Fairfax’s Greg Hywood, who spoke in the same place last month — are living in a fantasy world. It was no doubt a little dispiriting for the journalism students in the audience, but for those who have been alert to what’s going on it was nothing really new.

But despite his successful background in business, most people these days look to Turnbull for enlightenment not on economics but on politics, and that’s where things get interesting.

Seeing Turnbull in the flesh makes one realise again what an inappropriate leader he made for the Liberal Party. Officially, of course, he was deposed for his faults, and no doubt he has those: he lacks something of the common touch and takes little trouble to conceal his high opinion of himself.

Yet for all that it’s hard to escape the idea that among his colleagues he was (and still is) disliked more for his virtues. Turnbull has a clarity of thought that pays little respect to sacred cows, including those of his own side; it was clear not only in things like going out of his way to stress the importance of the ABC, but also in the things he obviously just took for granted, such as the superiority of broadsheet journalism to that of the Murdoch tabloids.

He explained the way that the economics of the new media world have led to an explosion of “opinion” (basically hard reporting is expensive but opinion is cheap) and the rise of highly partisan outlets whose consumers become sealed in their own world-view. Those on the left watch MSNBC, those on the right watch Fox News, and the “facts” on each are tailored to fit their own preconceived notions.

(Parenthetically, I don’t think this is quite right. Having watched both, I think MSNBC is still trying to do journalism, albeit coming from a centre-left perspective, whereas Fox is not even trying — it’s consciously producing propaganda.)

It wasn’t necessary for him to spell it out, but a major part of the “threat to democracy” is that one side of politics — first in the US but increasingly in Australia as well — has become unglued from reality and is living in a world where Barack Obama is a Marxist, global warming isn’t happening and creationism is no more extreme than, say, support for legal contraception.

Two years ago, one manifestation of that cost Turnbull his job, and for all his analytical skills it’s hard to see him getting it back unless the ground shifts in a major way.