There’s a debate under way in the newspaper/journalism corner of the blogosphere and Twittersphere, spurred by an op-ed commentary in the New York Times earlier this week. The piece, by Yale’s chief investment officer, David Swensen, and his colleague Michael Schmidt, a Yale financial analyst, starts with a questionable idea — that newspapers should be endowed as nonprofits in order to save them — and goes south from there. The column begins:

“The basis of our governments being the opinion of the people, the very first object should be to keep that right,” Thomas Jefferson wrote in January 1787. “And were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate to prefer the latter.”

Today, we are dangerously close to having a government without newspapers. American newspapers shoulder the burden of considerable indebtedness with little cash on hand, as their profit margins have diminished or disappeared. Readers turn increasingly to the Internet for information — even though the Internet has the potential to be, in the words of the chief executive of Google, Eric Schmidt, “a cesspool” of false information. If Jefferson was right that a well-informed citizenry is the foundation of our democracy, then newspapers must be saved.

There’s so much wrong with this essay that one scarcely knows where to start. In one critique, Alison Fine grasps a key reason the proposal lacks weight: Its “fundamental premise that only newspapers can hold government accountable” is absurd on its face.

The piece drew plenty of other attention from journalists and industry watchers including an interesting question from the Nieman Journalism Lab’s Zachary M. Seward, who wondered how much it would cost “to sustain every American newspaper in perpetuity as non-profit organizations” — and, after consulting with Alan Mutter came up with a guesstimate of $114 billion. Cough.

This is to save only the editorial staff, mind you. Journalists have an unfortunate habit of forgetting that other people also work in their organizations; and the logic here is that what we want to preserve is the jobs of the journalists who report the news — never mind that the people who still buy newspapers don’t do so entirely because of what fills the news columns, but also to see the ads and non-news features.

Seward reasonably points out that we’d be foolish to endow the newspaper industry as it currently exists. When I look at most local newspapers these days I see skeletons: businesses that have been systematically looted over the years, to send money to far-off corporate headquarters to pay fat executive salaries and boost stock prices. Preserve them? Why would we want to do that?

We’re unquestionably losing something important as the newspaper business model implodes. As a shareholder in three of those companies I’m unhappy about it, but I’m also not going to suggest that I blindly invested. Over the years I’ve made much, much more on my newspaper shares than I would lose now even if all of them (not a chance) were to fail tomorrow.

But we’re already seeing some models for the future emerge. One, just one, is nonprofit.

The idea that philanthropists should get into the community information business is not new, nor bad. It’s come up a number of times, most recently with the Knight Foundation’s funding support, along with community foundations, of local initiatives.

And not-for-profit media is hardly new. PBS, NPR and many other organizations don’t aim to make profits. But nonprofits are enterprises, too. They require business models as much as any for-profit enterprise.

Nonprofits generally exist, meanwhile, to ameliorate failures in the for-profit marketplace. Markets do fail, and they do so frequently. (I’m not talking here about the financial meltdown we’re experiencing, which is all about society’s failures in a much wider way.) Bill Gates’ worthy philanthropic efforts to rid the planet of diseases that aren’t profitable for the medical industry speaks specifically to this issue, as do countless other such enterprises.

The market failure most notable in the newspaper business of the past half-century was felt not by the journalists but by the buyers and sellers of products and services in communities. This was due to newspapers’ monopoly status, leading them to extract outrageously high profits from advertisers who essentially had no alternatives. Ask anyone who used the classifieds before eBay and craigslist and other better, cheaper competition came along — they’ll tell you what a failed marketplace looks like.

That era was good for the editorial staffs, which enjoyed long-term, stable employment and, in many cases, some distance from advertiser influence over the contents of the news pages. However excellent the journalists were, however — and many were truly superb — this was not a climate that bred risk-taking and innovation beyond imagining how to be better reporters. Improving the journalism was a great thing; but becoming conservative in other ways was not.

We’re seeing an explosion of innovation now. Some of it is coming from inside news organizations. But the majority is, from my perspective, coming from outside, from people inventing or adapting business models as well as journalism and information techniques.

Do we need funding sources for these new and adaptive projects? You bet. Some has already been committed or is in the pipeline now. It’s not enough, but it’s a start.

I’ll wager, with little fear of losing, that a great deal of the community information we’ll get in a few years will come from for-profit sources. But that will still leave vast territories for two other models: volunteers and nonprofits. Sometimes these will overlap.

The most essential role for nonprofits is almost certainly going to be in addressing the new market failure. This is the category I call “eat your spinach journalism,” the reporting that we all agree we need but which requires money and time to do. Certain kinds of investigations and watchdog reporting, including such basics as keeping an eye on what the City Council and local/state agencies are up to, may not support for-profit ventures, and we’ll desperately need other sources of funding for those.

That the New York Times used its valuable op-ed space to showcase such shallow thinking by the Yale financial guys is depressing. At least their essay sparked some conversation. But please, let’s move onto realistic possibilities.