Felix Salmon

Media ethics and transparency

By Felix Salmon
July 11, 2012

I’ve just been told that it’s International Media Ethics Day in September, which is so far away that I’m bound to forget to post something. But I have been thinking a bit about media ethics of late, and especially the ever-increasing list of rules designed to ensure that journalists are neither conflicted nor seen to be conflicted. And the more I look at such things, the more I come to the conclusion that all too often they do a very good job of banning harmless activity, while at the same time proving quite ineffective against situations which are far more ethically problematic.

It’s easy to come up with a list of cases where ethics watchdogs in high places have come down too harshly on infractions which were pretty harmless. Think of Mike Albo being fired from his NYT column, or for that matter Neil Collins being fired from Reuters. In neither case did the punishment fit the crime, notwithstanding of the letter of the law as unilaterally interpreted by the news organization in question.

It’s also easy to come up with instances of news organizations tying themselves up in rather hilarious knots in order to meet their own self-imposed ethical standards. Len Downie and Mike Allen never vote, for instance, for fear that their private and secret ballot might in some way inform their journalism. And I was particularly tickled by the contortions that the WSJ went through when faced with an extremely good-natured wager by Dan Neil:

The Wall Street Journal, which I joined in February 2010, does not permit its journalists to engage in this kind of wagering, regardless of subject or beneficiary — even by critics and columnists like me who are paid to have and express their opinions. And that’s perfectly reasonable: You wouldn’t want a theater critic betting a play will succeed or fail. Moreover, it’s better for journalists to write about the story than to somehow become part of the story. However, since I undertook this obligation before my tenure at the WSJ, and since the outcome is a charitable contribution, the Journal allowed me to follow through.

There’s an implication here that if Neil had promised to pay Elon Musk $1,000, rather than Doctors Without Borders, then the WSJ would have considered his welshing on his bet to be more ethical than his making good on it. We don’t know, which is a bit problematic in itself.

The theme running through all of these cases is that of reductio ad absurdum. Organizations decide that their journalists should be above reproach, and draft a set of rules to that effect. They then consider themselves bound by the rules, rather than by the principle underlying those rules.

The risk of absurdity is particularly high when it comes to social media in general, and Twitter in particular. As Twitter inexorably erases the professional/personal distinction, sophisticated organizations are increasingly adopting social-media policies based on simple “don’t be stupid” principles, rather than on hard-and-fast rules.

What goes for Twitter goes more generally, too. Twitter has proved that journalists are human, which has upside as well as downside. Journalistic ethics should embrace that, rather than trying to force all journalists into being magisterially impartial observers.

What would ethics look like in a world which is messier and more transparent? For one thing, we would spend less effort ring-fencing journalists’ lives and conflicts, and more time simply being open about them. The end result could actually be a significant improvement.

The reason is that the single biggest problem, when it comes to journalistic bias, has nothing to do with journalists owning stock in companies, or being paid speaking fees. (Although with speaking fees, a simple would-you-be-happy-being-transparent-about-this test is often a very good place to start.) Rather, by far the most common way in which journalists are captured by corporate interests is precisely the same way that journalists get scoops: source cultivation.

Journalists don’t always have sex with their sources, but when you’re having long and often boozy meetings with people, it’s statistically inevitable that many journalists are going to end up liking some subset of those people. After all, sources aren’t necessarily bad or evil: some of them are very good, very charming people. And often journalists end up working incredibly closely with sources for weeks or months on end as stories progress. Sometimes, that work becomes formalized: after Gretchen Morgenson used Josh Rosner as a source during much of the financial crisis, she then co-authored a book with him. Other times, the source ends up marrying the journalist: think Alan Greenspan and Andrea Mitchell.

But most of the time, it’s not nearly as obvious as that. Especially when it comes to background dinners with no particular agenda, a lot of what’s going on is a complex game of two people trying to get comfortable with trusting each other. That trust needs to be built up over time, and building it up takes a substantial amount of effort. It can be hard to distinguish, sometimes, from friendship. And if the journalist writes something bad about the source or the source’s company, the whole relationship can be jeopardized.

Keith Winstein has a fantastic way of explaining why beat reporters don’t make great investigative reporters; it basically comes down to the fact that beat reporters need access, which is the one thing that no company wants to give to an investigative reporter. But all reporters, be they beat reporters or investigative reporters or opinion journalists or anything else, have human sources and understandably feel bad if they write something that upsets the sources they get along well with. And that ends up shaping news stories, at the margin, much more than any financial incentives they might have.

Source relationships are particularly fraught when it comes to short-sellers, most of whom have good relationships with a certain subset of the financial-journalism world. That makes perfect sense: short-sellers often uncover newsworthy frauds, and it’s in everybody’s interest for those frauds to be uncovered in a public manner. But the closer a short-seller gets to a journalist, the more problematic the relationship, just because the short seller is likely to have advance notice of a key precipitating event — the publication of the story in question.

Here’s the problem: let’s say I’m a short seller, and I’ve uncovered a big fraud. I can go short the stock, but doing so is fraught with danger: so long as the fraud isn’t public, the stock can rise a lot and I can get stopped out. And if I simply sit back and wait for some journalist or government agency to find the fraud on their own, I could be waiting a very long time indeed. So I make things happen by talking to a journalist I know I can trust. And somewhere along the way I get a reasonably good idea for when that journalist’s story is going to appear — a story which I’m pretty sure is going to result in the company’s share price falling. At that point, I have the holy grail for any short-seller: knowing not only that a stock is going to fall, but also when it’s going to fall. And I have that information just because of how close I am to the journalist. You can see how the journalist, in this light, looks a bit less like the impartial crusader of Truth, and a bit more like the willing patsy of the short-seller.

I don’t know how or even whether this problem can or should be addressed, but I suspect that a bit more transparency could only help. And that’s not the only area where more transparency would surely be a good thing. I’m a long-time reader and fan of Joe Nocera, for instance, and so I know that he has featured Westwood Capital’s Dan Alpert in his column numerous times, as well as letting Alpert guest-blog for him on occasion. Last August, Nocera introduced him, quite explicitly, as “my friend Daniel Alpert”.

Yesterday, Nocera wrote about the eminent-domain plan for seizing underwater mortgages; he concluded that “it’s time to give eminent domain a try”. In doing so, he ducked all of the questions I’ve raised about the plan he’s writing about: how Mortgage Resolution Partners is buying mortgages rather than homes, and performing mortgages rather than defaulted mortgages, and indeed is trying to buy performing mortgages for a fraction of their face value, even as investors are valuing them at or even sometimes above par. “Since the home has dropped dramatically in value, the mortgage is worth a lot less than its face value,” asserts Nocera — ignoring the fact that once a mortgage is seasoned and performing well, it has to be worth at least as much as a performing unsecured loan of the same amount.

Why was Nocera so seemingly blind to the weaknesses in the MRP plan? Maybe he considered and rejected them; maybe he didn’t consider them at all. Or, maybe, he was predisposed to like the MRP plan because his friend Dan Alpert is one of the principal movers behind it. I knew that Nocera had written about the MRP plan before I knew what Nocera had written about the MRP plan — but because I also knew about the Nocera-Alpert connection, I didn’t need to read the column to know what Nocera’s conclusion would be. Nocera was under no compulsion to write about the plan, and I’m reasonably certain that if he can’t say something nice about Dan Alpert, he’s not going to say anything at all.

Dan Alpert wasn’t mentioned in Nocera’s column, and neither was his company, so even a close reader of Nocera’s work would have found it difficult to notice what you might call the friendship conflict. Nocera gives paid speeches, including to securitization professionals, and I don’t think that the money he gets paid for giving those speeches affects his columns one bit — any more than his cruise-ship seminars do. But the NYT keeps very close tabs on all that extracurricular income, because it’s seen as raising potential ethical issues. Nocera’s connection with Alpert, on the other hand, isn’t scrutinized at all — it’s a perfectly unexceptional journalist-source relationship — despite the fact that it must have had some significant effect on the column.

This, then, is where a bit of first-person transparency would come in useful. “I’m biased: I’ve known Dan Alpert for years, and he’s a friend. But I still think this is a good idea.” It doesn’t take up much space, it’s perfectly natural, and it helps readers understand where the writer is coming from.

Was it unethical for Nocera not to disclose his relationship with Alpert? I wouldn’t go that far. But then again, I don’t think it’s particularly helpful to try to draw rules-based bright lines between “ethical” and “unethical”, and say that anything on one side of the line is fine, while anything on the other side of the line is unacceptable. We don’t want journalists to become like corporate executives, who, in the words of Eduardo Porter, “behave as corruptly as they can, within whatever constraints are imposed by law and reputation”.

Instead, I’d encourage all journalists to consider every action they do, every day, and ask whether it’s helpful or unhelpful, good or bad, at the margin. And the point here is to spend as much time trying to do things which are good as you do avoiding things which are bad.

Right now, US journalism has a rather Calvinist view of ethics: it’s all downside and no upside. But it seems to me that if publications encouraged their journalists to be more ethical, rather than just requiring them not to be unethical, things might get a lot better. We’d see more detailed disclosures like Kara Swisher’s at All Things D. We’d see fewer anonymous quotes, since there’s always something a bit dirty and secretive about them. We’d have fewer journalists automatically saying “yes” whenever anybody asked them if they could talk off the record. And we’d have columnists like Nocera explain their personal connections to the subjects they were writing about, even when doing so isn’t strictly necessary: it would still at the margin be better than not doing so.

My suggestion for Media Ethics Day, then, is that, this year, we stop talking about rules: what behaviors are OK, and what behaviors aren’t. I don’t have a problem with those rules existing, but I worry that an unintended consequence of putting those rules in place is that journalists end up worrying much more about the rules, and what side of the rules they’re on, than they do about the underlying ethics of what it is that they’re doing, or not doing. Similarly, I’d like to see a little less emphasis on what constitutes unethical behavior in journalism. While that’s an important topic, it’s also a constrained one. What I want to see more of is discussion of what constitutes ethical behavior in journalism — what kind of things can all journalists do to make their practice ever more ethically sound?

I’d particularly love to see that conversation take place in the context of an increasingly social world, where friendships and relationships are more out in the open than they have been in the past, and where grown-ups recognize that conflicts are a fact of life, rather than something which should always be avoided.

If you study ethics in a philosophy department, it’s a tough nut to crack, with lots of very difficult questions. In a journalistic context, by contrast, everybody seems far too keen to boil everything down to simple yes/no answers.

15 comments so far | RSS Comments RSS

@felix – interesting topic, would you take this so far as to require journalists to disclose all forms of relationship, e.g. I’ve known executive A since university, detested him then, detest him now? Or do you think it’s easier to control the negative emotions contra positive?

Posted by J_F | Report as abusive

If we’re going to have a Media Ethics Day, then we need a Selfless Politician Day, and Hedge Fund as a Contributor to Society Day, and a Clean Coal Day, and so on.

Most of what passes for “the media” is entertainment; the exceptions are usually regurgitated press releases or public lobbying. Ethics is rarely a consideration for any of those activities.

Posted by KenG_CA | Report as abusive

“By far the most common way in which journalists are captured by corporate interests is precisely the same way that journalists get scoops: source cultivation”

I don’t understand the need for the word “corporate” here. As Felix lays out, it occurs across all beats for reasons of both access and simple human friendship. It’s definitely a significant issue in political coverage, is clearly an issue in covering sports, and applies to sources at NGO’s/special interest groups every bit as much as corporations.

Posted by realist50 | Report as abusive

The biggest problem with journalistic ethics is that in practice it does extremely little, but it gives journalists this big holier than thow fig leaf to cover over their nature as little more than paid entertainers.

I will start taking the agonizing over ethics seriously when they stop relentlessly cheering on development projects regardless of how the numbers work out, or mindlessly repeating political talking points because that is what sells airtime. Even NPR does this constantly. Drive time is dominated by absolutely trivial political horse race narration focused on illusory issues, with little to no reportage.

In the face of that obsessing over whether or not the “journalists” let an Obama/Romney staffer buy them a steak before they spent 5 minutes broadcasting their talking points with no factual or editorial oversight is just comical.

Posted by QCIC | Report as abusive

Selfless Politician Day? Oh, of course, that’s in most politician’s diaries for February 30th!

Seriously though, I thought it was simple. In the old days, journalists searched out and published the truth. When did they become compromised into looking for or creating the biggest arguments, and beggar the truth? How did honest reporting become subsumed into the quagmire of satisfying rich backers and the needs of advertisers?

Posted by FifthDecade | Report as abusive

“When did they become compromised into looking for or creating the biggest arguments, and beggar the truth? How did honest reporting become subsumed into the quagmire of satisfying rich backers and the needs of advertisers?”

When the FCC began handing out TV licenses, they required stations to broadcast news programs as a public service. When they realized that news can be profitable, it turned into an entertainment business. And in the entertainment business, all that matters is profit. Truth is a nice-to-have, but not mandatory.

Posted by KenG_CA | Report as abusive

I would agree that source cultivation is a HUGE problem – but that is due to the fact that so much “news” now is simply entertainment. I can’t remember the last time I saw a critical question on CNBC of a guest (Oh yeah, there are pseudo tough questions, and rhetorical tough questions about people under indictment who are not actually appearing). But this could be alleviated with reporters who are more knowledgeable about the subject, who understand mis-direction, and more facts and less speculation.
I read the Post a lot less and bloggers a lot more becuase I don’t need to read abbreviated stenography – there is the interenet now and you can get the source document. And I can’t count the times I have read newspaper articles and wondered, “did the reporter actually read – and understand – the referenced document?”
And oh yeah, I didn’t know Andrea Mitchell was Alan Greenspan’s wife till a few years ago. Is that why on those Meet the Press interviews he was treated as a demigod???

Posted by fresnodan | Report as abusive

Isn’t it easier to assume that every journalist is conflicted and then just form your own opinion given the facts they disclose?

Sure we would like them to be independent arbiters of the truth, the whole truth etc… but they are simply human with an entire lifetime of experience to mould their views.

Such a set up doesn’t prevent excellent and important work (Muddy Waters and Meredith Whitney please stand up).

It applies to commenters even more: KenG clearly has a problem with us hedgies. (Why we are singled out as not contributing to society any more than other financial services is odd…)

Also if you study any philosophy you will note that following your own rules is circular logic not a reductio.

Posted by TinyTim1 | Report as abusive

TinyTim, you’re right, I should have included far more financial service occupations, but in the interest of brevity I picked just one, and it should be obvious to even a hedgie that you don’t really add value to society as a whole. The total value of everything is unchanged by your actions, but some people end up with more, and some less. So while a relative handful of people (statistically speaking, nobody) benefit from the actions of hedge funds, there is no gain to society as a whole.

For the record, I don’t have a problem with you. I just know that you work for you, not for me, or anyone else.

Posted by KenG_CA | Report as abusive

@KenG_CA – I’m don’t think that you can say that all financial markets that are zero-sum to the direct participants are necessarily zero-benefit to society at large.

Take the archetypical example of a producing farmer hedging future crop prices: that hedge might be zero sum between the farmer and the counterparty, but if the financial stability from knowing his future prices induces the farmer to grow more crops and profitably sell them into a (reasonably) free market, doesn’t that marginal production increase society’s wealth?

Or imagine a business that doesn’t have the risk appetite to pursue a productivity-improving project that will be financed by long-term debt, if the interest rate on that debt would be variable, and the world is in a volatile interest rate environment. But that the company WOULD pursue that project if they can assure themselves of interest costs over that long-term (i.e. lock in a fixed rate). The IR swap would be zero-sum between the company issuing the variable-rate debt and the financial counterparty selling the fixed-rate swap, but if the project is truly productivity enhancing, then that project made society better off, and the IR swap is beneficial to society at large.

IANAEconomist, but I’m sure that there is some economic term for that concept.

Posted by SteveHamlin | Report as abusive

Steve, I used hedge funds as an example of an industry that adds no value to society, and TinyTim takes exception. So then I say, no, of course there are other sectors of the financial services industry that are equally useless to society, and you interpret it as a knock on all of them.

I’m not saying all of the financial markets are zero-benefit to society at large, but that a lot of the functions that people who work in the financial services industry do not benefit society. At all. There are exceptions of course, but the financial industry has morphed from a utility that adds value to society to a vehicle that largely extracts rents.

Posted by KenG_CA | Report as abusive

I was well aware I add zero value. I just thought others were just as deserving of that criticism too.
And in fact, plenty in financial services have extracted significant value FROM society!
Bail-outs with no claw-backs anyone?

Perhaps it should have been Central Bankers Pay Positive Real Interest Rates Day or Ratings Agencies Admit “It’s ALL Junk” Day or iBankers Pitch “M&A Destroys Value” Day.

Actually, yours were better.
I take it back.

Posted by TinyTim1 | Report as abusive

“And in fact, plenty in financial services have extracted significant value FROM society!
Bail-outs with no claw-backs anyone?”


and thanks.

Posted by KenG_CA | Report as abusive

The whole concept of “finance” is designed to add value to society through zero-sum transactions. People with excess capital supply it to those who need the capital for some productive activity. Even hedgies may add value in some small way (they provide an investment service for their clients).

That said, the finance sector doesn’t need to be nearly as large or active as it is to fulfill that basic purpose. Much churn for comparatively little gain.

Posted by TFF | Report as abusive

And what is journalism these days anyway? A few years back I had no doubt what it was, but now I don’t know where the definition begins and where it ends. “The transmission of a single message, other than a sales promotions, via means capable of reaching more than 50 people”?

Posted by tindale | Report as abusive

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/