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.