There’s a game of “can you top this?” going on, with the Senate, the House, and the White House all trying to one-up each other to see who can talk the toughest tough-talk about corporate crooks. The media sits on the sidelines, egging on the politicians, lavishing barrels of editorial ink on ever more strident outbursts of moral indignation. The dynamic has become out-of-control, self-accelerating — like a truck careening downhill with no brakes, and last week I warned that it might just end up killing capitalism in order to save it (see “Killing Capitalism in Order to Save It”). Apparently the markets are worried about that too, as they fall to new 5-year lows.
The media’s role in this represents a new pinnacle of hypocrisy. In their zeal to goad the politicians to more draconian control of big business, they always conveniently fail to mention that the media itself is big business — about as big as big business gets. While these residents of glass houses have been throwing stones at everyone else in the name of the public good, the panic they have fomented has cost that same public about a trillion dollars in market losses over the last three weeks.
In my view the most shameful media hypocrisy has been the New York Times’ position on stock options. For months the Times has run story after story — sometimes labeled as editorials, sometimes as news — blaming options for “excessive” executive compensation and for providing incentives for fraud, and calling for the disclosure of options expense in companies’ income statements.
I am unaware of a single instance in any of these stories in which the Times disclosed the fact that The New York Times Company issues stock options to its own executives — options that operate precisely like the options issued by Enron, Global Crossing, WorldCom and all the others — the cost of which is not included in the Times Company’s income statements.
On Tuesday, July 16 the Times ran an editorial headlined “It’s the Real Thing,” celebrating the fact that the Coca Cola Company had announced its intention to include options expenses in its income statements. They wrote, “With President Bush digging in his heels in defense of accounting tricks that hide the true cost of stock options, and Congress equivocating under intense corporate lobbying
