CNN is running two apocalyptic articles about the current Worldcom situation; "The Death of Confidence" and "The Last Straw".  When scandal after scandal hits the papers, and we realize that most of the earnings statements we looked at over the past five years were pure fabrications, we start looking for stable ground.  Enron, Tyco, Rite-Aid, Martha Stewart, Qwest, Adelphia, Worldcom, and the list goes on.  Now that the market has had a correction from the days of the irrational bubble, it is about time for the corporate governance and reporting laws to have a correction.  If anything good comes out of all of these scandals, it will be that they triggered a correction that leaves our market system stronger.

On the other hand, there is another correction which is long overdue, and which should be triggered by these scandals.  Unfortunately, I am afraid that the necessary correction is being overlooked by the press, since it involves their own ranks.  Why is nobody asking the question, "why didn't the press tell us about all of this fraud five years ago?"  The answer is that investigative journalism is a dead art, and all that the press have left are talking heads who talk about whatever their audience is buzzing about.  If you ask them why they never reported on this fraud earlier, they'll say "because nobody told us about it until now".  In other words, until everyone knows about it, the reporters aren't going to know about it.  Today's press corps certainly still see themselves in the same moralistic light that journalists of previous generations did -- as defenders of liberty.  But many journalists today seem to think that they defend liberty by "explaining the news" to an ignorant audience, rather than by "uncovering the facts".

In my opinion, the pathetic performance of the press after 9/11 (reporters saying that Afghanistan was in the Middle East, for example) should have been a wakeup call.  But in the very few cases where criticism of the press arose after 9/11, members of the press defended themselves by saying "we were directing more resources toward domestic and economic issues during the bubble, since that is what people were interested in, so we neglected international matters."  But now with Worldcom and Enron, we see that they weren't doing any real journalism. 

So, do you think that the press are doing soul-searching now?  Far from it!  Dan Gillmore (Dan is a reporter for San Jose Mercury News) is excoriating "the system" like there's no tomorrow.  Dan writes, "George W. Bush said today he was shocked, shocked to hear of WorldCom's fraud. Nice to hear this sentiment -- but come on.  Bush is part of the system that has created this mess."  This passage is perfect illustration of the hypocrisy and arrogance that have infected the press.  Dan is implying that the President knew about the fraud, and if he didn't know about the fraud, he must be an idiot, because even Dan Gillmore could see the whole "system that created this mess".  Dan goes on to explain "the system" to the rest of us ignorant cows, and throws in a lot of political suggestions about what we should do now that we have received enlightenment.  (Time to go home, journalistic duty accomplished)  But you have to wonder, if it was so obvious, why didn't he write about before?  If he knew that these companies were lying to us, why didn't he dig deeper and get the proof for the whole world to see?  If the employees of Worldcom have to be the ones to publicize the wrongdoing, and all that CNN (and all of the other reporters) can do is add stupid political commentary, what the hell do we have journalists for?  I can add my own stupid political commentary (that's why I have a blog), but I have a day job that doesn't involve journalism.  I need someone else to dig up facts and report the news.  Democracy needs someone to dig up facts and report the news.  It was nice to believe that there were trustworthy people called journalists who had day jobs in fact-finding and reporting the news.  Unfortunately, that belief seems to have been even more naive than believing corporate earnings reports.  If we can't have confidence in the journalists to give us good information, we're in really bad shape.  In my opinion, journalism gets a big, fat, F for failure to perform their duties with regards to corporate governance.  Journalism already got an E for failure to cover international affairs before and immediately after 9/11.  There is a problem.  Now, let's see if the press admits it and gets started on a correction.

12:48:41 PM    comment