Two Cases of Press Malpractice; T. Machan

Invariably, the broadcasters gave an ac count of this major economic event in terms of how thousands of First Interstate employ ees would probably lose their jobs in Wells Fargo's efforts to consolidate its services and to secure a more profitable operation for the resulting huge enterprise. Employees were interviewed, and journalists pretend ing to some measure of economic and busi ness expertise gave their take on what occurred. In all cases the emphasis was placed on just how this major buyout would hurt people, even consumers (because the reduction in the work force surely isn't good for customers). Not one reporter even advanced the idea that such a merger will probably enrich a Dr. Machan, this month's guest editor, is a professor of philosophy at Auburn University, Alabama. His next book, A Primer on Ethics, will be published later this year by the University of Oklahoma Press.

great many of the Wells Fargo and First Interstate stockholders-that these people will now be able to invest more money into their children's education, health care, clothing, ballet lessons, and other efforts to make a better life for themselves. And all of this will very likely lead to more demand for labor which eventually will give those who leave the employ of First Interstate Bank another opportunity for productive employ ment. None of this is certain, of course, but neither is it certain that those laid off from the merger will remain unemployed. Yet the media experts immediately focused on the possible downside, indicating nothing worthwhile that might come of what oc curred. The only benefit mentioned-the possible profitability of the merger-came as a snide remark. It was clear that the pundits thought of profit as a crass motive for doing such terrible things as consolidat ing two giant financial institutions. Profit making-seeking prosperity-was once again consigned to the cultural status of a perni cious virus that merely hurts people.

Such narrow-mindedness seems to char acterize nearly all news-reporting, with only a few exceptions in such outlets as the Wall Street Journal, Investor's Business Daily, Forbes, and Barron's. If there were such a thing as a tradition of class-action malprac tice suits initiated against the press, no doubt one could make a very strong case against all reporters whose only aim seems to be to denigrate business and incite public fear. 605 606 THE FREEMAN • SEPTEMBER 1996 What can be done? Well, it would be nice if business schools and other educational institutions made some effort to teach basic economics to journalism majors. But that will not be enough, since economists typi cally try to avoid giving a moral defense of the market. What is really necessary is the moral education of the public, including the press, about how prosperity is a worthy objective and that those who pursue it are doing the right thing.

Is this going to happen soon in our edu cational system? I doubt it. 2. Paying Management for Downsizing A 60 Minutes segment in the spring of 1996 featured various executives and other professionals who have been laid off in various efforts by firms to trim their opera tions. A reporter confronted the president of AT&T because of his hefty compensa tion while AT&T was undergoing downsiz ing in connection' with its failed efforts to enter the PC market. Once again, sentimen tality triumphed over journalistic integrity. In the first segment, one of the people interviewed expressed outrage at the fact that he was laid off while higher manage ment was receiving pay increases. The re porter provided sympathy and support but never bothered to raise any questions as to whether higher management may have made a good decision in pursuing the policy of downsizing as far as their primary duty to the stockholders is concerned. Any jour nalist who knows economics should realize that one sign of good management is mak ing a company profitable. Those who own the company's stock and depend on its remaining profitable hire management and reward it precisely for making difficult de cisions.

The second segment exhibited further economic ignorance. This time the reporter tried to get the president of AT&T to con fess to being a supremely greedy man for having received a very good deal indeed in the wake of probably saving AT&T from taking a major economic hit via its failing PC division (which it had acquired in an earlier unwise purchase of NCR). By quickly moving to abandon the PC market, AT&Tprobably saved thejobs of thousands of employees and the investment of millions of stockholders. But, of course, 60 Minutes was clueless. It opted for the typical rich bashing favored by politicians and the pop ular press. Responsible economic reporting would have made it clear that in all fields of employment there are times when downsiz ing must occur. Without such restructuring employers will fail their investors. Football teams, orchestras, faculties at universities, hospitals, television broadcasters, and ev ery other kind of employer can find that without trimming costs, there will be no future left for itself.

Who's to Blame? If there is any culprit to be held respon sible for downsizing, it is the consuming public. But consumers· are not culpable either since they do not owe loyalty to any firm, product, or service. They owe loyalty to their own aspirations, goals, wants, and hopes. That is what should dictate their purchasing practices. But by doing so, they willoften stop buying certain kinds of goods and services, adversely affectingemployees of less favored firms. CBS, which produces 60 Minutes, may well experience some downsizing itself, at least if competing networks have anything to say about it. The company has been steadily fallingin the ratings. Some changes are already being made at the program with the additio~ of face-offsbetween Molly Ivins and Stanley Crouch and P. J. O'Rourke-and it may have to be scrapped entirely. In the meantime, celebrity newscasters and viewers should familiarize themselves with the realities of the business world. One such reality is that a firm does not exist primarily for the sake of making its loyal employees happy, secure, and satisfied. It exists to further. the goals of those who invest in it, who own it, so they can send TWO CASES OF PRESS MALPRACTICE 607 their kids to college, take vacations, provide for the future, and eat healthy meals. Em ployees can never become complacent.

In the United States, there is now too much complacency about security. People are being told by too many commentators that they are owed a living, that they have "a right to ajob," "a right to a livingwage," and "a right to health care and social secu rity. " So it is no wonder that laid-off em ployees are bamed, their self-esteem dam aged-they think they are being cheated when the market can no longer sustain them in their preferred line of work. In other systems we see illusory security and then, when the roof caves in, disap pointment and disillusionment. In a free market economy, one is never deceived about security, and can make preparations, take precautions, take out insurance, set aside resources for times of economic hard ship. There is no such thing as a risk-free economic system. 0 Ideas and Consequences by LawrenceW. Reed Reviving a Civil Society "Taxes," said Oliver Wendell Holmes, Jr., "are what we pay for civilized society. " But as my fellowFreeman colum nist Mark Skousen explained in his remark able monograph "Persuasion vs. Force," a much better case can be made that taxation is actually the price we pay for the lack of civilization. If people took better care of themselves, their families, and those in need around them, government would shrink and society would be stronger as a result.