Audit Notes: Guardian Editor on Hackgate, Judge Rakoff, Confidence Game

Read Guardian Editor Alan Rusbridger’s Orwell lecture for an excellent overview and analysis of Murdoch’s hacking scandal, and his paper’s lonely role in uncovering it.

On a day MP Tom Watson called James Murdoch a “mafia boss,” Rusbridger explains why the press, the police, politicians, and regulators covered up for News Corporation:

The simplest explanation is a combination of fear, dominance and immunity. People were frightened of this very big, very powerful company and the man who ran it. And News International knew it. They had become the untouchables of British public life.

Why fear? Well, this was a bad company to upset. It owned nearly 40% of the national press as well as the controlling influence in a broadcaster sometimes as referred to as an 800lb gorilla. It owned the satellite platform and the EPG on which competitors were listed. It owned significant swaths of sports and movie rights.

It is a company intensely interested in its political muscle - an influence which politicians now readily admit they routinely courted because they felt they had no alternative. There became an unspoken reciprocity about the business and regulatory needs of Mr Murdoch and the political needs of anyone aspiring to gain, or stay in, office. Here are the echoes of the Jim Taylor machine in the 1930s Frank Capra film, Mr Smith Goes to Washington.

And on top of all this, there was - as we now know - a private intelligence operation. It was an intelligence operation which outsourced the dirtiest work to criminals and which, according to people in a position to know, had a formidable private investigation capability.

In the past few days we’ve learned how anyone who crossed this company - whether they were MPs asking questions or lawyers filing suits - were likely to be put under surveillance themselves. Tom Watson MP was followed for five days. Mark Lewis and Charlotte Harris, two tenacious solicitors, were followed around, together with their children. The private eye doing this work says he was employed right up to July this year.

— I like The Wall Street Journal’s lede on its profile of SEC skeptic Judge Jed Rakoff yesterday:

It was a boilerplate, how-I-spent-my-summer-vacation assignment for sixth-grader Jed S. Rakoff.

By the time he turned it in, though, what was supposed to be a five-page report about a family trip to Colonial Williamsburg swelled to 50 pages packed with unsavory stories about the Founding Fathers, such as that Benjamin Franklin cheated on his wife.

Rakoff yesterday sharply questioned Citigroup and the SEC over their proposed settlement, as expected, and he raised a particularly critical question on the SEC’s policy of letting its fraud settlers neither admit or deny wrongdoing. The Washington Post is good to get that in its lede:

A federal judge Wednesday challenged the SEC’s plan to settle a fraud case against Citigroup for $285 million, saying that the deal would recoup only a fraction of investors’ losses and would leave the firm free to proclaim its innocence in private lawsuits over the remaining damages.

There’s more down in the story:

The standard neither-admits-nor-denies clause means the SEC settlement could not be used as proof of guilt by investors suing Citigroup on their own. Citigroup could assert its innocence in those disputes, Rakoff said.

“So why do you want to require the private parties to have to re-prove what you believe you can already prove?” Rakoff said. “[W]hy does it make any sense?”

— Over at the Nieman Journalism Lab, CUNY’s C.W. Anderson has a smart post responding to both Audit Chief Dean Starkman’s news gurus piece and Emily Bell’s criticism of it:

The other side to institutions and professions, a side long recognized by even the harshest critics of professional power, is that they create non-material cultures that insulate workers from the ravages of the free market. Professions create an alternative reward system in which status and pay are determined not simply though the workings of the market, but through alternate hierarchies of worth. And it is the dismantling of these alternate hierarchies that I think Starkman is really angry about in his piece. Notice, too, the organizations that Emily Bell praises in her response to Starkman: The Guardian, The New York Times, Andy Carvin at NPR, Ushahidi, Global Voices, and ProPublica. What all of these organizations have in common is that most of them are insulated, to some degree or another, from the ravages of the market. Even those openly market-oriented news organizations like The New York Times have powerful, mitigating professional cultures that, however obnoxious they might occasionally be, protect their workers from feeling like timecard-punching drones…

The problem, in short, may not be institutions, networks, or the Internet. The problem might be capitalism — or, if that sounds too radical, then perhaps the problem is the libertarian ethos that is also embedded in the Silicon Valley roots of the future of news consensus, an ethos which often renders it incapable of seeing any value to institutions at all. If the problem with journalism, in addition to its hidebound structures of power and its arrogant professionals, is that it has been a free-rider on a non-functional informational marketplace, then the collapse of structures designed to insulate it from the market is an unalloyed good. This is what I think many of those working on the edges of the future of news space seem to believe.

If, on the other hand, you think that the free market (historically, and also in its most brutal current form) has been a problem for journalism rather than a boon, then you might wince in horror to see one of the last barriers to that market collapse in a cloud of digital dust.

Read it all. Read all three of these pieces, while you’re at it.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,