Friday, May 06, 2005

Enron, The Media, and Ethics

My god, they can't be serious. I'm sure you already read this from the god-like Daily Howler regarding this absurdist post from The American Prospect's blog. They cite a new study of journalists which suggests that they're more ethical than we thought. Using a variant of an ethical dilemma test developed in the 70's, two researchers interviewed 249 journalists over two years. And what did they find? According to The American Prospect, they found that journalists are very ethical; and that it's kind of case-closed kind of thing that most anti-MSM bloggers (such as myself) will be too "blindered" to link to. Is this person really so dense?

The problem with behaving ethically only BEGINS with understanding what ethical behavior is. But it is well known that people will betray their ethics when faced with real world situations. It's just a fact. They're not trying to, they just don't realize when they're facing an ethical dilemma.

If you give someone a hypothetical situation, they will often know exactly how they should act. But if that same situation actually applies to them, they might behave differently. In fact, you can give someone a hypothetical situation which applies directly to something they've done, but in which they were not behaving ethically; and they'll likely give you the ethical answer. But if you told them that it applied to them, they'll then give you their rationalizations. That's just human nature.

Understanding ethics is the beginning, not the end of ethical behavior.

CPA Ethics

Take Enron, for example. I can assure you that, in theory, each and every CPA involved with that mess knew exactly what they should do. They stress and test this stuff in college, and then force you to take ethics classes as part of your continuing education.

And they don't focus on lofty ethics that some philosophy professor might spew out, regarding Plato or a perfect world. No. These are reality-based, specific instructions on what is proper and improper. As specific as reasonably possible. If X happens, you should do Y or Z, kind of stuff. There are whole sections on how to ensure the appearance of auditor independence, what to do with unethical corporate officers or employees, and even specifics on how to identify your CPA firm so as to not mislead people.

And each CPA involved, from Enron's employees to a whole host of Andersen's auditors, had to pass these classes and had clearly read this stuff. And if you tested them each day that they did these unethical things, they would all likely pass. I have no doubts about that. They're not hard tests, but you do have to understand the subject.

Boiling Frogs

But in practice, even those specific instructions were worthless. And the problem is that corruption had permeated all levels of their corporate environment. They all had a really bad attitude about this stuff, and it's infectious. Especially the auditors. Auditors are supposed to be polite, but not friendly with their clients. Andersen was outright pimping for Enron and seeking ways to subvert the rules they were supposed to be enforcing. But Enron had a corrupt culture and that infiltrated everything.

And I'll tell you right now, that's one of the damn things they warn you about! They teach you to watch-out for corrupt corporate cultures; and how you should document a bad corporate culture, which might even be reason enough to dismiss the client. And at the least, you should design your audit tests more strictly in order to be able to find more wrong-doings. That's just standard procedure and every single CPA knew that stuff; to the point that they were held professionally-liable for them and were punished. These aren't hypothetical ethics, but actionable ones.

But in practice, everything's different. It's kind of like the frog in boiling water thing. You put a frog in boiling water and he'll hop out; but if you put him in regular water, he won't notice when you turn up the heat and will eventually boil to death (or so they say). And that's exactly what happened to the auditors and employees of Enron. They knew this stuff was wrong, and they did it anyway because they just hadn't noticed. They just hadn't realized they were faced with an ethical dilemma until after they got busted.

No Excuse

And just so you know, from a CPA's perspective, there is no excuse for what happened at Enron or Andersen. No excuse. The media may have bought into the "sleeping watchdog" theory that it was sloppiness on Enron's part, but I can assure you that sloppiness is absolutely no excuse in auditing. There are very specific procedures on that, and sloppiness and "falling asleep at the switch" are punishable offenses. That's what the auditor is there for.

So these CPA's knew better. They could pass their professional ethics tests. And yet we got Enron all the same. It wasn't because they were unethical, and if Ken Lay had told them "hey, let's do something unethical" they probably would have rejected it and been offended. But it wasn't like that.

They had just gotten used to a certain culture, and they were completely unaware that they had long passed the line into unethical behavior. They knew they were kind of cheating, but they saw it more as a bending of the rules. And accounting certainly does have a slight level of bending involved, as it's not always easy to intrepret every rule into realworld applications. Especially with Enron and their complicated business deals. But, unfortunately for them and us, they had not just bent the rules, but broken them completely.

Ethical Journalists Gone Wild

And tying this back into our journalist ethics, we see the exact situation. This isn't a situation of unethical journalists who don't know how to behave ethically. Nor is it a case of journalists openly flouting ethical standards they know they should follow. Rather, we have smart people who know how to behave in theory, but are trapped into a corporate culture which denies them the ability to apply their ethical understanding. As with everything else, journalism has it's own little short-cuts and ways of bending the rules. And once you start going down the path of short-cuts, you often lose sight of the ethical situations you might be by-passing.

Beyond that, my main problem with journalists isn't their ethical lapses, per se. I mean, is it unethical to unintentionally give an unbalanced viewpoint in a news story? Or is it unethical to reprint unverified statements, as long as you don't verify either side's statements? More importantly, what if it involves glossing over something bad that Bush did? Is that unethical? How can they tell? Everything's subjective to these people because they see fact-checking and objective verification as being partisan. Both sides are going to complain about whatever you do, or so they believe, so you might as well just print their damn words directly and leave it at that. To them, that is ethical.

No, my main problem isn't necessarily with their ethics. It's with their idiocy. It's not that they're too dumb to know right from wrong. It's that that they've got a warped vision of reality...due to their subjective view of life. Plus, they have the wrong attitude about their role in life. They now believe that their job is to write interesting stories, rather than informative ones. And to print both sides of a story, even if one side is provably wrong. So they won't see that as unethical, because they're convinced it's their job. And no ethics test can test for that.

And that isn't even to approach the issue of study bias or the issue of trying to test wordsmiths and professional talkers on a subjective test that they'd clearly want to pass. Journalists may be a bit stupid, but they clearly know how to say what they want to say. And so much of testing and appearing smart is simply communication skills and understanding words. People are always far dumber than they believe, but unless they've got very good communication skills, they're far smarter than you realize. And some of the people we see as the smartest are simply the ones best able to communicate intelligently. Whether that appearance is real or not is always difficult to determine; but sounding smart is not proof of intelligence.

And if nothing else, I'm sure that this ethical test said nothing about whoring it up for the Whitehouse, or routinely providing anonymity to high level Whitehouse officials so that they can say any spin they please without any real accountability. And even if it did, the journalists questioned would likely not see how it applied to them.

So it is with ethics. Good guidelines, but it's not always easy to see when you're supposed to use them.

No comments: