This law has been mentioned several times in the news recently. It is not the most popular subject but it is a good illustration of what's wrong with our system. In our modern society anything that happened more than 15 minutes ago seems to be completely forgotten. It's not even like ancient history. Some people know ancient history. Sarbanes-Oxley was passed in 2002 and was a huge deal at the time. But I would bet that if you polled 100 people over 30 easily 95 would not have a clue as to what Sarbanes-Oxley is. That is really depressing. So here is my attempt to remedy the situation.
To understand Sarbanes-Oxley you have to understand the Enron scandal. But it happened in the still more ancient era of 2001. So probably 96% of the over 30 set have already forgotten about Enron. And it is useful in explaining Enron to go even further back. In 1923 Edwin Lefevre published "Reminiscences of a Stock Operator" (still in print), a thinly disguised account of the activities of a notorious stock manipulator named Jesse Livermore. Along the way Lefevre documented many of the ways to cook a market so that a speculator "in the know" could make a lot of money. It turns out that "Reminiscences" can be thought of as the bible that guided the actions of the executives at Enron.
I am going to just sample one aspect of the Enron scandal. If you want a more complete picture of the entire scandal read "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron". For those who are visually oriented there is a documentary (now available on DVD) called "Enron: The Smartest Guys in the Room" that is based on the book and covers essentially the same material albeit more briefly. So what I am going to cover is indicative of the whole scandal but only covers one aspect of it. And my story starts in the 1930s.
In an effort to get the economy back on track during the great depression the Roosevelt Administration undertook several major capitol construction projects. The projects I am interested in were in the form of large dams. The principal reason for the dams was flood control/irrigation and irrigation revenues were the principle source of revenue to cover payment of the bonds used to finance the projects. But it cost little more to add hydroelectric generation capacity to the dams. And, since most of the cost was covered by irrigation fees, the resulting electric power was extremely cheap. Many of these dams were built in the states of Washington and Oregon. Neither state had enough population or industry to soak up the electric power. California did. So, since the additional cost was relatively modest, long haul power lines were built connecting the entire West Coast together. This allowed load balancing between Washington/Oregon and California as the timing of their peak power needs differed. So it became common to sell electric power up and down the West Coast.
For many years the players in this power market were electric utility executives whose chief concern was servicing their own local customer base. So the market was operated in an informal and gentlemanly manner. It worked well for all the participants in spite of the fact that it was essentially unregulated. This is because the players behaved honestly and ethically with each other and did not try to take advantage of or "pull one over on" each other. But the market did not operate using "modern (e.g. Wall Street) business practises". Standard analysis in some political circles assumes that "gentleman's" markets are inefficient. The theory is that converting the market to a modern business-like approach will result in lower costs and greater efficiencies. The new players playing by the new rules will be able to wring inefficiencies out of the system and cut better deals resulting in everyone benefiting.
Executives at Enron made these kinds of arguments to politicians. "Let Enron in and we will shake everything up and everyone will win", they said. And "free market" oriented politicians (e.g Republicans) bought these arguments. They let Enron into the market for trading electricity up and down the West Coast. And they did it in an essentially unregulated manner. "The invisible hand of the market corrects all inefficiencies and punishes all bad behavior", the argument went. And if the Enron executives and the traders they worked for had been honest and ethical there is a small chance that the market could have operated more efficiently than it had in the past. Unfortunately, the Enron people saw their job as making vast amounts of money for Enron and giant commissions for themselves. I don't know if they had read "Reminiscences" but they acted as if they had. And for the first few years they were wildly successful. They made pots of money for Enron and for themselves. And, since success is proof of brilliance, they styled themselves as "the smartest people in the room". I don't think any of them ever figured out, or at least were willing to admit in public, that all they were really doing was following in the footsteps of Jesse Livermore, someone who had done it all before roughly a hundred years earlier.
What actually happened when Enron traders took control of the West Coast power market was that prices went up, way up, and the whole system became unstable. Enron traders literally had power plants shut down to create artificial shortages so that they could jack the price up by 1000% and more. So the West Coast, and particularly California, got the worst of both worlds, way higher prices and many more brownouts and blackouts. So much for the "efficient market" theory.
Eventually events caught up with Enron and it failed spectacularly. Before it crashed Enron got into a number of markets, not just West Coast power. And not all their schemes worked out as well. And it turned out that they were cooking the books. So Enron left a giant mess behind when it finally crashed. A lot of what Enron did was illegal. But it turned out that most of what it did was completely legal. And it turned out that the Anderson accounting firm had made a lot of money advising Enron management as to how to do what they wanted to do legally or at least in such a way that they were unlikely to get caught. Meanwhile Anderson was Enron's "auditor of record". The "auditor of record" is supposed to represent stockholders. The "audited financials" are supposed to tell stockholders how well the company is doing. But stockholders were getting conned along with everyone else. Anderson did this because they were making a lot more money from the advising business than they were for the auditing business.
The Enron scandal, and a number of others that happened at about the same time, caused the U.S. Congress to decide it had to do something. The result was Sarbanes-Oxley. SOX, as it is commonly referred to, was supposed to fix a number of problems that came to light as a result of Enron and the other scandals. The first thing was to make certain practices illegal. The second thing was closely related to this. Many Enron executives pleaded ignorance. They said "I did not know that illegal thing was happening. Subordinates did it without my knowledge". And, of course the subordinates claimed that they had kept their seniors completely informed. SOX said it was the responsibility of senior executives to know about illegality that was happening below them. In essence, ignorance was no longer a permitted defense. The third thing that SOX did was make it illegal for the same company to consult and audit. In future, the "independent" auditor would then catch the bad behavior. That was the idea.
SOX is now generally reviled. It is said to impose draconian requirements that are expensive to implement without actually fixing the underlying problems. No one, including its original proponents, are currently big fans of SOX. How did this come to be? Here's where I point my finger at the current system.
SOX tried to do big complicated things. Enron proved that there were big problems that needed to be fixed and most people believed that the fixes would be complicated. Lobbyists know how the system works. They know that sometimes there is an avalanche coming down the mountain and you just can't stop it. But you can divert it. So lobbyists, when confronted with an avalanche, don't try to stop it. They try to divert it. They know that no one gets points for working through the fine print and figuring out what it means. So instead of trying to stop things they cause complex provisions to be added. There is always some ostensible reason for replacing a simple provision with a complex one. But the complexity makes it easy to insert loopholes into the bill. The loopholes allow people in the know (the lobbyist's clients, for instance) to continue to do what they want to. This strategy goes by the name of the "swiss cheese" strategy. Make sure there are enough holes inside the cheese so that apparently solid cheese is actually filled with air.
This "swiss cheese" strategy always works. It has been used successfully for decades by the National Rifle Association to make sure that Federal gun control legislation is ineffective. Many other laws that appear tough on the outside have been hollowed out by lobbyists from all parts of the political spectrum. Business lobbyists are perhaps better at it than others but everyone uses it. There are literally thousands of provisions in the Federal Tax Code that benefit a single company. No one takes the time to work through all the provisions of a thousand page bill to figure out where the loopholes are and, more importantly, who benefits from them. This is because no one cares very much when something like this is exposed. And removing the loophole is nearly impossible. The beneficiary of the loophole will spend a lot of time and money defending it. Every one else eventually decides closing the loophole is too much trouble and moves on.
It would be nice if the "reduce regulations" Republicans were serious about this. Vast numbers of regulations are in place to benefit a single individual or company. We'd probably all be better off if these regulations (and the single beneficiary laws they are often based on) were eliminated. But the Republicans have never actually done this. Instead they go after regulations like "clean air" and "clean water" that benefit citizens but make it harder for businesses to make a buck.
As I indicated, even the proponents of SOX see that it has serious problems. In actuality it doesn't work very well due to all the swiss cheese it contains. The obvious thing for supporters to do would be to undertake a substantial revision to SOX to make it more effective and less needlessly burdensome. The problem is that they are afraid. They are afraid that if they make a major effort to fix SOX the lobbyists will swoop in and create even more swiss cheese making things even worse than the bad present situation. So they decide that their best option is to just leave things alone. And they are right. And the fact that they are right perfectly illustrates what is wrong with the current system. The system needs to be changed so that the "swiss cheese" strategy stops being a strategy that always works.
Monday, November 28, 2011
Saturday, November 12, 2011
Joe Paterno
Joe Paterno is a failure as a leader and a role model. He is a failure as a human being. So why do we care about his win/loss record? Unfortunately, his win/loss record (impressive) turns out to be more important then his failures. There are a lot of people that have figured out that our society has real serious problems. But there is disagreement about what the underlying cause is. The poster child for the underlying cause is Joe Paterno.
Big time sports are a fact of life and a powerful influence in our society. In holding a mirror up to society and using big time sports as the mechanism people quickly dismiss professional sports. After all they are corrupted by money. The players are paid outrageous amounts of money to play. But in college football the players are supposed to be "gifted amateurs". They are in it for the glory, for the love of the game, not the money. That's what we all pretend. And we have been pretending this for a long time. My father used to tell a story about a football player named Hugh McElhenny. The story is that he took a pay cut when he transitioned from college ball to the pros. Now he played his college ball in the late '40s and was a pro until the mid '60s, a time before the real money hit pro football. But the point is that big time college football has been a scam for a long time.
Now "sports" is supposed to be about more than just bread and circuses. It's about something called "sportsmanship". It is supposed to teach players and, to a certain extant fans, the value of "good sportsmanship" and "clean living". Grantland Rice, in a poem he wrote in 1908 called "Alumnus Football", summarized good sportsmanship as "not that you won or lost - but how you played the game". That, at least was how the virtues of the game were seen in 1908. How do we see it now?
Vince Lombardi, the famous coach of the Green Bay Packers pro football team is said to have opined that "winning isn't everything, it's the only thing". Some say Lombardi was misquoted. Wikipedia says the quote originated with Henry Russell "Red" Sanders, a UCLA college football coach of yore. It doesn't matter. The point is it embodies the actual belief of most people in big time college football either as players, coaches, staff, or as fans. It is certainly guided Joe Paterno's actions.
And from Mr. Paterno's perspective, he was right. After it was announced that he was dropped (Was he fired? Did he retire? We don't know and we don't care!) from his job there was literally rioting in the streets by those angered that Mr. Paterno was no longer the coach. The rioters were, as far as I can tell, ordinary citizens: students, alumni, fans of all stripes. They emphatically believed that "winning is the only thing". The contrast can't be starker. These people believed that it was more important to win football games than to prevent young boys from being raped. There has been no rioting that I know of by people who are horrified that young boys were systematically raped over more than a decade.
And it's not just Penn State fans that believe this. There was a successful pro basketball player from around here. After he retired it slowly came out that he had fathered something like 10 children out of wedlock during his carrier. This was treated as a great source of humor in the community by the press and, as far as I can tell, by most fans. It did his reputation absolutely no harm. It was enough that he was a winner on the basketball court. And he's small time. As far as I know the sex that resulted in the procreation was consentual. There have been several scandals associated with the local big time college football program in the last few years. Among them are the well supported allegations are of players raping women. But the key scandal in this period, according to most fans, was the scandalously low number of games in the "win" column.
If we look across the entire country these kinds of scandals, including the rape kind, are so common they are treated as cliches. The only question is "will the perpetrators survive the scandal". And it is a cliche that the answer is generally determined by the win/loss record. Mr. Paterno stands out as one of the few examples where he was bounced in spite of his success as measured by his win/loss ratio.
There is a case to be made for Mr. Paterno believing that it is not his fault. In a larger sense the blame lies with the rioters I alluded to above. Unfortunately they represent the common wisdom of the public at large. And it is the thinking of the public at large not the thinking of the people working on all the big time sports programs in the country that is the root cause of our problems. It is their thinking that moves society at large, not the Joe Paterno's of this world. Mr. Paterno's crime is understanding how the system really works and using this understanding to his advantage. The real rules are:
In the case of Penn State, we had a member of the coaching staff engaged in child rape involving numerous children spanning a period of over a decade. And several of the rape incidents took place in Penn State athletic facilities. That amount of activity does not take place in such an outrageous (and by outrageous I really mean easily noticed) manner over such a long period of time without numerous people learning of it. We now know that several people including Mr. Paterno learned of this behavior. None of these people stepped in to put a stop to the behavior. None of these people brought in outside authorities. None of these people provided any aid or assistance to the victims or their families. In a football program the coach is the General. He sets the tone for his own behavior and the behavior of his subordinates. It is illuminating that this happened under Mr. Paterno's "leadership".
Mr. Paterno did not invent the system. He was just smart enough to understand it and use it to his advantage. That, combined with his coaching skill, led him to a lot of success over many years. And this is not the "Penn State System". The same system to a greater (better win/loss record) or lesser (worse win/loss record) extent is implemented in program after program across the country. This is only possible because the fans across the country understand and support the system as it actually is. Scandals by the dozen have erupted across the years and in every part of the country. I can think of no case where the public has risen up in their wrath and said "we want a less successful but ethical program instead of a more successful but unethical program". It has not happened. The response to a cheating scandal is not "you are unethical - you are bad". It's "you were dumb to get caught". It's not about the bad behavior. It's about embarrassing us by getting caught.
It is bad enough that this kind of thinking infects sports everywhere and at all levels. But the same kind of thinking pervades many other areas of society. We had a financial meltdown caused by bad behavior on Wall Street. Wall Street followed the big time sports model exactly. They won (earned lots of money) by cheating (selling garbage as AAA investments to suckers). Firm after firm learned they couldn't make as much money as the cheaters so they joined them in the cheating. And they covered it up by capturing the journalists and resorted to the usual intimidation and bribery tactics when it came to regulators and politicians ("you'll never do business on the street again unless you give this an AAA rating" or "we'll drop a ton of money into your opponent's campaign if you don't support our legislation" or "how would you like a nice cushy job in a couple of years that pays big bucks for little work"). Using captive "business" reporters and slick marketing campaigns they have built and maintained a "fan" base that to this day supports their practices. But, like the Penn State scandal where the activity was just too egregious for many sports fans to stomach, the fan base for Wall Street has been shrinking, again due to egregious behavior (robosigning, giant bonuses, etc.)
And we see a lot of the same thing happening in the political arena. To win (in this case elections not games) takes lots of money. The best source of the most money is unpopular special interests. Many of these special interests are unpopular because their agendas are hostile to the interests of voters. So smart politicians cover up their connections to these special interests. To retain the support of these interests they must do their bidding while maintaining the fiction that they are not. This is done by writing the legal provisions in such a way that it takes a lot of work (not the strong suit of most journalists) to figure out what the provision actually does and hiding who got the provision inserted into the bill. In many cases the provision does not directly provide the benefit the special interest wants. Instead it makes the bill effectively unworkable by inserting many loop holes that the special interest can use to advantage. This is one reason why we have so many thousand page bills. In addition the speical interests run sophisticated marketing campaigns supporting their positions and candidates.
And most campaigns are no longer fought on the basis of the positions held by the candidates or, when a candidate has one, the candidate's record of actual achievement. Instead we have mud wars: contests where it's a matter of who can throw the most mud at the other candidate in the most effective manner. This is aided and abetted by the media's "horse race" approach to coverage. Instead of who is doing what, coverage consists of who is ahead in which poll. The substance of either campaign or candidate is almost entirely ignored. So candidates who are good at being popular win over candidates who are duller but more substantial.
There is something wrong with our society. It is the gradual transition from our being guided by a "how you play the game" orientation to a "winning is the only thing" orientation. I think most people subconsciously understand this. But they rarely support the "do the right thing" people over the "win at any cost" people. In the short run, supporting the "win at any cost" people results in more wins. Our team wins more games and out stock portfolio does better. But in the long term the result is more losses. In sports other teams resort to even more outrageous tactics to win and our team's win/loss record deteriorates. In business the losses from the Wall Street crash depress the value of our portfolio for a decade or more. We need to support more honest and ethical people over the "win at any cost" people in spite of the short term pain this requires. I think it will turn out that the short term losses will be smaller and the long term gains will be greater than most people think.
Big time sports are a fact of life and a powerful influence in our society. In holding a mirror up to society and using big time sports as the mechanism people quickly dismiss professional sports. After all they are corrupted by money. The players are paid outrageous amounts of money to play. But in college football the players are supposed to be "gifted amateurs". They are in it for the glory, for the love of the game, not the money. That's what we all pretend. And we have been pretending this for a long time. My father used to tell a story about a football player named Hugh McElhenny. The story is that he took a pay cut when he transitioned from college ball to the pros. Now he played his college ball in the late '40s and was a pro until the mid '60s, a time before the real money hit pro football. But the point is that big time college football has been a scam for a long time.
Now "sports" is supposed to be about more than just bread and circuses. It's about something called "sportsmanship". It is supposed to teach players and, to a certain extant fans, the value of "good sportsmanship" and "clean living". Grantland Rice, in a poem he wrote in 1908 called "Alumnus Football", summarized good sportsmanship as "not that you won or lost - but how you played the game". That, at least was how the virtues of the game were seen in 1908. How do we see it now?
Vince Lombardi, the famous coach of the Green Bay Packers pro football team is said to have opined that "winning isn't everything, it's the only thing". Some say Lombardi was misquoted. Wikipedia says the quote originated with Henry Russell "Red" Sanders, a UCLA college football coach of yore. It doesn't matter. The point is it embodies the actual belief of most people in big time college football either as players, coaches, staff, or as fans. It is certainly guided Joe Paterno's actions.
And from Mr. Paterno's perspective, he was right. After it was announced that he was dropped (Was he fired? Did he retire? We don't know and we don't care!) from his job there was literally rioting in the streets by those angered that Mr. Paterno was no longer the coach. The rioters were, as far as I can tell, ordinary citizens: students, alumni, fans of all stripes. They emphatically believed that "winning is the only thing". The contrast can't be starker. These people believed that it was more important to win football games than to prevent young boys from being raped. There has been no rioting that I know of by people who are horrified that young boys were systematically raped over more than a decade.
And it's not just Penn State fans that believe this. There was a successful pro basketball player from around here. After he retired it slowly came out that he had fathered something like 10 children out of wedlock during his carrier. This was treated as a great source of humor in the community by the press and, as far as I can tell, by most fans. It did his reputation absolutely no harm. It was enough that he was a winner on the basketball court. And he's small time. As far as I know the sex that resulted in the procreation was consentual. There have been several scandals associated with the local big time college football program in the last few years. Among them are the well supported allegations are of players raping women. But the key scandal in this period, according to most fans, was the scandalously low number of games in the "win" column.
If we look across the entire country these kinds of scandals, including the rape kind, are so common they are treated as cliches. The only question is "will the perpetrators survive the scandal". And it is a cliche that the answer is generally determined by the win/loss record. Mr. Paterno stands out as one of the few examples where he was bounced in spite of his success as measured by his win/loss ratio.
There is a case to be made for Mr. Paterno believing that it is not his fault. In a larger sense the blame lies with the rioters I alluded to above. Unfortunately they represent the common wisdom of the public at large. And it is the thinking of the public at large not the thinking of the people working on all the big time sports programs in the country that is the root cause of our problems. It is their thinking that moves society at large, not the Joe Paterno's of this world. Mr. Paterno's crime is understanding how the system really works and using this understanding to his advantage. The real rules are:
- Win.
- Cheat (necessary to achieve #1) but don't get caught.
- Make sure you have an effective "cover up" program for when you do get caught.
In the case of Penn State, we had a member of the coaching staff engaged in child rape involving numerous children spanning a period of over a decade. And several of the rape incidents took place in Penn State athletic facilities. That amount of activity does not take place in such an outrageous (and by outrageous I really mean easily noticed) manner over such a long period of time without numerous people learning of it. We now know that several people including Mr. Paterno learned of this behavior. None of these people stepped in to put a stop to the behavior. None of these people brought in outside authorities. None of these people provided any aid or assistance to the victims or their families. In a football program the coach is the General. He sets the tone for his own behavior and the behavior of his subordinates. It is illuminating that this happened under Mr. Paterno's "leadership".
Mr. Paterno did not invent the system. He was just smart enough to understand it and use it to his advantage. That, combined with his coaching skill, led him to a lot of success over many years. And this is not the "Penn State System". The same system to a greater (better win/loss record) or lesser (worse win/loss record) extent is implemented in program after program across the country. This is only possible because the fans across the country understand and support the system as it actually is. Scandals by the dozen have erupted across the years and in every part of the country. I can think of no case where the public has risen up in their wrath and said "we want a less successful but ethical program instead of a more successful but unethical program". It has not happened. The response to a cheating scandal is not "you are unethical - you are bad". It's "you were dumb to get caught". It's not about the bad behavior. It's about embarrassing us by getting caught.
It is bad enough that this kind of thinking infects sports everywhere and at all levels. But the same kind of thinking pervades many other areas of society. We had a financial meltdown caused by bad behavior on Wall Street. Wall Street followed the big time sports model exactly. They won (earned lots of money) by cheating (selling garbage as AAA investments to suckers). Firm after firm learned they couldn't make as much money as the cheaters so they joined them in the cheating. And they covered it up by capturing the journalists and resorted to the usual intimidation and bribery tactics when it came to regulators and politicians ("you'll never do business on the street again unless you give this an AAA rating" or "we'll drop a ton of money into your opponent's campaign if you don't support our legislation" or "how would you like a nice cushy job in a couple of years that pays big bucks for little work"). Using captive "business" reporters and slick marketing campaigns they have built and maintained a "fan" base that to this day supports their practices. But, like the Penn State scandal where the activity was just too egregious for many sports fans to stomach, the fan base for Wall Street has been shrinking, again due to egregious behavior (robosigning, giant bonuses, etc.)
And we see a lot of the same thing happening in the political arena. To win (in this case elections not games) takes lots of money. The best source of the most money is unpopular special interests. Many of these special interests are unpopular because their agendas are hostile to the interests of voters. So smart politicians cover up their connections to these special interests. To retain the support of these interests they must do their bidding while maintaining the fiction that they are not. This is done by writing the legal provisions in such a way that it takes a lot of work (not the strong suit of most journalists) to figure out what the provision actually does and hiding who got the provision inserted into the bill. In many cases the provision does not directly provide the benefit the special interest wants. Instead it makes the bill effectively unworkable by inserting many loop holes that the special interest can use to advantage. This is one reason why we have so many thousand page bills. In addition the speical interests run sophisticated marketing campaigns supporting their positions and candidates.
And most campaigns are no longer fought on the basis of the positions held by the candidates or, when a candidate has one, the candidate's record of actual achievement. Instead we have mud wars: contests where it's a matter of who can throw the most mud at the other candidate in the most effective manner. This is aided and abetted by the media's "horse race" approach to coverage. Instead of who is doing what, coverage consists of who is ahead in which poll. The substance of either campaign or candidate is almost entirely ignored. So candidates who are good at being popular win over candidates who are duller but more substantial.
There is something wrong with our society. It is the gradual transition from our being guided by a "how you play the game" orientation to a "winning is the only thing" orientation. I think most people subconsciously understand this. But they rarely support the "do the right thing" people over the "win at any cost" people. In the short run, supporting the "win at any cost" people results in more wins. Our team wins more games and out stock portfolio does better. But in the long term the result is more losses. In sports other teams resort to even more outrageous tactics to win and our team's win/loss record deteriorates. In business the losses from the Wall Street crash depress the value of our portfolio for a decade or more. We need to support more honest and ethical people over the "win at any cost" people in spite of the short term pain this requires. I think it will turn out that the short term losses will be smaller and the long term gains will be greater than most people think.
Thursday, November 3, 2011
Tom Brokaw is a bad journalist
I'm sorry, I just can't take it any more. I have seen two appearances by Tom Brokaw, first on the "Charlie Rose" show and then on "The Daily Show". He is selling his new book "The Time of our Lives". You are supposed to buy the book because he is supposed to know what he is talking about. He is supposed to know what he is talking about because he is a "respected journalist". I listened to him carefully and the conclusion is inescapable. He is a bad journalist. Why?
First, he missed the biggest political story in the last 20 years. This story is so big it colors all political coverage today and has colored it now for many years. Yet Mr. Brokaw missed it. What is this story? In about 1990 Newt Gingrich took control of the Republican party. He did this by raising a ton of money (for those days) and distributing it around to candidates. He also formulated an overall strategy for how the Republican party should operate. This strategy can be summarized by the following phrases: "take no prisoners", "slash and burn", "my way or the highway". In general he took the party to the right, enforced crushing discipline, and adopted a "no negotiation - no compromise" approach to dealing with Democrats. In the early days he recruited candidates to run against other Republicans if he thought the incumbent Republican was not sufficiently conservative or not sufficiently disciplined (e.g. they didn't do what Newt told them to do). In several cases Republicans lost seats they didn't need to lose. But with savvy political operatives and enough money Newt was able to win those seats back and more. In 1994 the GOP took over the House of Representatives for the first time in living memory.
With leadership in hand, Newt proceeded to implement his plan dubbed "the Contract with America". Things went down hill from there for Newt. Newt engineered two government shutdowns and got himself involved in scandal. So he lost his leadership position in the House and, until recently, retired from the pursuit of elected office. But by then most elected Republicans at the Federal level had gotten comfortable with "the Newt way" so it lives on in the Republican party to this day. The whole "no compromise" approach of the modern Republican party is just "the Newt way".
Now none of this is any kind of secret. It's all old news. But Mr. Brokaw hews to the "it's a DC problem" rather that the correct "it's a Republicans in DC problem" to describe the current level of gridlock at the Federal level. And Democrats deserve some blame but not much. For instance, Senate Republicans pioneered the aggressive use of the Filibuster and other parliamentary tactics to delay or derail legislation they didn't like. And the Democrats have tried on occasion to adopt the same methods. But when Senate Democrats tried to Filibuster to block Bush judicial appointments the "gang of 12", six Democrats and six Republicans, instantly appeared. The gang succeeded in derailing the Democratic Filibuster effort and a "compromise" was reached that resulted in most Bush judicial appointments going through. Since the Democrats have regained control the Republicans have successfully Filibustered everything and no Republicans have joined a "gang of 12" or any other kind of gang that could interfere with the Republican's ability to block legislation.
Or consider President Obama. He is considered a wuss by Mr. Brokaw and nearly all other "journalists" in DC. Why? Because he has spent.nearly three years bending over backward trying to find some kind of formula to generate a compromise and break loose a few Republican votes. A cornerstone of this strategy has been to include Republican ideas into all of his major proposals. In spite of any number of efforts the Republicans have maintained discipline, thrown up roadblocks continuously, and voted strictly along party lines against almost all of his proposals. Mr. Obama has been so aggressive in courting Republicans that he has alienated a large portion of his base including yours truly. So the idea that Democrats have been effective in contributing to gridlock and made more than a token contribution to "the partisan divide" is patently ridiculous. Mr. Brokaw is ridiculous when he does not accurately describe the situation.
Then there is the biggest cultural story of the last 30 or more years. There is a fundamental conflict going on in the country. It is not, at least superficially, the divide between the left and the right, or between the rich and the poor, or between the coasts and the heartland, or any of the usual "divides" covered in the media. It is the conflict between "truth" and "truthiness". On the "truth" side you have people who work hard trying to figure out what is really going on. There dedication to "the truth, the whole truth, and nothing but the truth" sometimes forces them to believe in "inconvenient" truths. On the "truthiness" side you have people who believe that "wanting it to be true" is enough to make it so. And, unfortunately, the truthiness people are winning. And, still more unfortunately, Mr. Brokaw and the vast majority of his colleges contribute to the success of the truthiness side.
Now you might think that based in the divides I have so far outlined that the only people who care about this are people who are interested in cultural issues, people like politicians and religious people. But it turns out that business has been investing heavily in the truthiness side of the conflict. And the reason is advertising. What if you have a product that is inferior to the competition? In this situation the truth is not your friend. Now instead let's say that your product is not inferior. It's just that you are competing in a product category where all products are essentially the same. Well, you can go with the low price strategy. But this leads to a spiral and pretty soon no one is making any money. It is better to end up with only a part of the market if the price is high enough so you can make a profit. So in this "tweedle dee tweedle dum" situation the truth is at best of only marginal use. In both of these cases truthiness works much better. My product makes you sexier or happier or is "new and improved". If the formulation has been changed it is new and any change must be an improvement, right?
Rush Limbaugh listeners pride themselves on being "ditto heads". They believe anything Rush says. So if Rush says "buy product X" they will buy it. This means you don't have to spend a lot of money coming up with a clever marketing campaign that may fail spectacularly. You can just pay Rush a large fee to say nice things about your product. Now, imagine another radio personality, someone who has the same demographics as Rush and the same sized audience but whose audience is filled with skeptics. What do you do? If the personality on this show says "buy product X" the skeptical audience will not just fall into line and buy the product. You will be forced to spend money on making the product better, or coming up with a really clever marketing campaign, or maybe just settling for a smaller market share.
So businesses love ditto heads and hate skeptics. It makes sound business sense for the tobacco industry to manufacture more ditto heads that will buy phony health claims about cigarettes. And industries that do a lot of harm like the coal industry love truthiness people. If they can come up with a claim that these people want to believe then they have succeeded. And even if you are just an ordinary business that makes consumer products, if you can condition people to be more likely to be receptive to a clever marketing campaign (e.g. move them closer to the truthiness end of the scale) then you can make your business more successful. So many businesses for sound business reasons have decided to contribute to the dumbing down of the public.
Now the news business is supposed to be biased in this conflict. They are supposed to be pro truth and anti-truthiness. But the modern news business in just another business. It is supposed to make as big a profit as it can. And that means attracting sponsors that will pay high prices for advertisements. And that means the job of a modern "newsman" has changed. As Robert Shaffer (Skeptical Inquirer, November/December 2011) put it: "News reporters don’t want to get the facts. They want to get ratings". So people like Mr. Brokaw diligently cover "both sides" of stories that have some other number of sides. They let pass without comment idiocy as long as it is spoken by "an authoritative source". They cover unimportant but dramatic stories (if it bleeds, it leads) and ignore dull but important stories. And they frequently use the excuse "it's too complicated - we just couldn't find a way to present the story so the public could understand it". Then a TV show called "The West Wing" came along. Aaron Sorkin managed to condense numerous "too hard" political arguments into short and accurate statements that could be easily understood by viewers. So the real problem was that people like Mr. Brokaw were too lazy or too incompetent to do what Mr. Sorkin did in episode after episode.
Now some may say that Mr. Brokaw is "among the best at what he does". And there may be some truth to this position. But that just means there are a lot of "journalists" out there who are not bad. They are awful. News should not be graded on the curve. It is not enough for someone to be not as bad as the other guy. He (or she) needs to be actually good. It is too important to settle for anything less. Decades of bad journalism have left us where we are now. We have a dysfunctional government that is not going to be fixed unless people actually understand what the real problems is. (Hint: The Republicans did it). Now I completely agree that there is plenty of room for improvement on the Democratic side. But that's small beer compared to the Republican contribution to the current mess. And one of the critical factors holding us back from doing anything about the Republicans is the current state of journalism as exemplified by Mr. Brokaw. Why do you think that a large number of people, myself included, think the best journalist working today is Jon Stewart. Stewart is not even a professional journalist. The fact that he is a better journalist than the so called professionals, in spite of the fact that he sees himself as a comedian, says it all.
First, he missed the biggest political story in the last 20 years. This story is so big it colors all political coverage today and has colored it now for many years. Yet Mr. Brokaw missed it. What is this story? In about 1990 Newt Gingrich took control of the Republican party. He did this by raising a ton of money (for those days) and distributing it around to candidates. He also formulated an overall strategy for how the Republican party should operate. This strategy can be summarized by the following phrases: "take no prisoners", "slash and burn", "my way or the highway". In general he took the party to the right, enforced crushing discipline, and adopted a "no negotiation - no compromise" approach to dealing with Democrats. In the early days he recruited candidates to run against other Republicans if he thought the incumbent Republican was not sufficiently conservative or not sufficiently disciplined (e.g. they didn't do what Newt told them to do). In several cases Republicans lost seats they didn't need to lose. But with savvy political operatives and enough money Newt was able to win those seats back and more. In 1994 the GOP took over the House of Representatives for the first time in living memory.
With leadership in hand, Newt proceeded to implement his plan dubbed "the Contract with America". Things went down hill from there for Newt. Newt engineered two government shutdowns and got himself involved in scandal. So he lost his leadership position in the House and, until recently, retired from the pursuit of elected office. But by then most elected Republicans at the Federal level had gotten comfortable with "the Newt way" so it lives on in the Republican party to this day. The whole "no compromise" approach of the modern Republican party is just "the Newt way".
Now none of this is any kind of secret. It's all old news. But Mr. Brokaw hews to the "it's a DC problem" rather that the correct "it's a Republicans in DC problem" to describe the current level of gridlock at the Federal level. And Democrats deserve some blame but not much. For instance, Senate Republicans pioneered the aggressive use of the Filibuster and other parliamentary tactics to delay or derail legislation they didn't like. And the Democrats have tried on occasion to adopt the same methods. But when Senate Democrats tried to Filibuster to block Bush judicial appointments the "gang of 12", six Democrats and six Republicans, instantly appeared. The gang succeeded in derailing the Democratic Filibuster effort and a "compromise" was reached that resulted in most Bush judicial appointments going through. Since the Democrats have regained control the Republicans have successfully Filibustered everything and no Republicans have joined a "gang of 12" or any other kind of gang that could interfere with the Republican's ability to block legislation.
Or consider President Obama. He is considered a wuss by Mr. Brokaw and nearly all other "journalists" in DC. Why? Because he has spent.nearly three years bending over backward trying to find some kind of formula to generate a compromise and break loose a few Republican votes. A cornerstone of this strategy has been to include Republican ideas into all of his major proposals. In spite of any number of efforts the Republicans have maintained discipline, thrown up roadblocks continuously, and voted strictly along party lines against almost all of his proposals. Mr. Obama has been so aggressive in courting Republicans that he has alienated a large portion of his base including yours truly. So the idea that Democrats have been effective in contributing to gridlock and made more than a token contribution to "the partisan divide" is patently ridiculous. Mr. Brokaw is ridiculous when he does not accurately describe the situation.
Then there is the biggest cultural story of the last 30 or more years. There is a fundamental conflict going on in the country. It is not, at least superficially, the divide between the left and the right, or between the rich and the poor, or between the coasts and the heartland, or any of the usual "divides" covered in the media. It is the conflict between "truth" and "truthiness". On the "truth" side you have people who work hard trying to figure out what is really going on. There dedication to "the truth, the whole truth, and nothing but the truth" sometimes forces them to believe in "inconvenient" truths. On the "truthiness" side you have people who believe that "wanting it to be true" is enough to make it so. And, unfortunately, the truthiness people are winning. And, still more unfortunately, Mr. Brokaw and the vast majority of his colleges contribute to the success of the truthiness side.
Now you might think that based in the divides I have so far outlined that the only people who care about this are people who are interested in cultural issues, people like politicians and religious people. But it turns out that business has been investing heavily in the truthiness side of the conflict. And the reason is advertising. What if you have a product that is inferior to the competition? In this situation the truth is not your friend. Now instead let's say that your product is not inferior. It's just that you are competing in a product category where all products are essentially the same. Well, you can go with the low price strategy. But this leads to a spiral and pretty soon no one is making any money. It is better to end up with only a part of the market if the price is high enough so you can make a profit. So in this "tweedle dee tweedle dum" situation the truth is at best of only marginal use. In both of these cases truthiness works much better. My product makes you sexier or happier or is "new and improved". If the formulation has been changed it is new and any change must be an improvement, right?
Rush Limbaugh listeners pride themselves on being "ditto heads". They believe anything Rush says. So if Rush says "buy product X" they will buy it. This means you don't have to spend a lot of money coming up with a clever marketing campaign that may fail spectacularly. You can just pay Rush a large fee to say nice things about your product. Now, imagine another radio personality, someone who has the same demographics as Rush and the same sized audience but whose audience is filled with skeptics. What do you do? If the personality on this show says "buy product X" the skeptical audience will not just fall into line and buy the product. You will be forced to spend money on making the product better, or coming up with a really clever marketing campaign, or maybe just settling for a smaller market share.
So businesses love ditto heads and hate skeptics. It makes sound business sense for the tobacco industry to manufacture more ditto heads that will buy phony health claims about cigarettes. And industries that do a lot of harm like the coal industry love truthiness people. If they can come up with a claim that these people want to believe then they have succeeded. And even if you are just an ordinary business that makes consumer products, if you can condition people to be more likely to be receptive to a clever marketing campaign (e.g. move them closer to the truthiness end of the scale) then you can make your business more successful. So many businesses for sound business reasons have decided to contribute to the dumbing down of the public.
Now the news business is supposed to be biased in this conflict. They are supposed to be pro truth and anti-truthiness. But the modern news business in just another business. It is supposed to make as big a profit as it can. And that means attracting sponsors that will pay high prices for advertisements. And that means the job of a modern "newsman" has changed. As Robert Shaffer (Skeptical Inquirer, November/December 2011) put it: "News reporters don’t want to get the facts. They want to get ratings". So people like Mr. Brokaw diligently cover "both sides" of stories that have some other number of sides. They let pass without comment idiocy as long as it is spoken by "an authoritative source". They cover unimportant but dramatic stories (if it bleeds, it leads) and ignore dull but important stories. And they frequently use the excuse "it's too complicated - we just couldn't find a way to present the story so the public could understand it". Then a TV show called "The West Wing" came along. Aaron Sorkin managed to condense numerous "too hard" political arguments into short and accurate statements that could be easily understood by viewers. So the real problem was that people like Mr. Brokaw were too lazy or too incompetent to do what Mr. Sorkin did in episode after episode.
Now some may say that Mr. Brokaw is "among the best at what he does". And there may be some truth to this position. But that just means there are a lot of "journalists" out there who are not bad. They are awful. News should not be graded on the curve. It is not enough for someone to be not as bad as the other guy. He (or she) needs to be actually good. It is too important to settle for anything less. Decades of bad journalism have left us where we are now. We have a dysfunctional government that is not going to be fixed unless people actually understand what the real problems is. (Hint: The Republicans did it). Now I completely agree that there is plenty of room for improvement on the Democratic side. But that's small beer compared to the Republican contribution to the current mess. And one of the critical factors holding us back from doing anything about the Republicans is the current state of journalism as exemplified by Mr. Brokaw. Why do you think that a large number of people, myself included, think the best journalist working today is Jon Stewart. Stewart is not even a professional journalist. The fact that he is a better journalist than the so called professionals, in spite of the fact that he sees himself as a comedian, says it all.
Subscribe to:
Posts (Atom)