Audit Notes: N.J., Paragon of Clean Government; Algae Fuel, Fees, The Rich (UPDATED)

Bloomberg’s Jonathan Weil just guts a Center for Public Integrity report card on state corruption. It found that New Jersey was the least corrupt state in the country—a result that should have flagged to CPI that something had gone awry with their survey.

That flagged it for Weil, at least, who looked into the methodology CPI employed:

For example, O’Dea gave New Jersey a top score of 100 percent when asked to evaluate this statement: “In practice, the state-run pension funds disclose information about their investment and financial activity in a transparent manner.”

How did she decide that? The questionnaire said to give a high score if such information was available online at little or no cost. Her notes, posted on the center’s website, say she asked someone at the New Jersey State League of Municipalities about this. “Very transparent,” her notes said. The center gave the state an “A” in the category of “state pension-fund management,” based partly on O’Dea’s answer to that question.

Now consider that, in August 2010, New Jersey became the only state ever sued for fraud by the Securities and Exchange Commission. The SEC said the state for years lied to municipal- bond investors about the underfunded condition of its two largest pension plans.


(UPDATE: CPI’s executive director seriously disagrees. See his comments below)

Mother Jones has a good video report on the prospects for algae as a clean, renewable fuel—something that Republican candidates are mocking the president for supporting:

How could the slimy green muck that grows in your aquarium and washes up on the beach be a future cornerstone of American energy independence? So when President Obama stood before the University of Miami recently and said algae could provide up to 17 percent of our transportation fuel, we wanted to know: Is he right?

— Yves Smith of Naked Capitalism writes about Paul Starobin’s report in the current issue of CJR on business journalists taking Wall Street speaking fees:

We are much easier to manipulate than we want to believe. Social psychologist Robert Cialdini, in his classic book: Influence: The Art of Persuasion, reported that people who received a gift as minor as a can of soda were more receptive to a sales pitch. There’s a reason drug companies would give doctors pens, note pads, and desk toys.

And journalists have a much more basic problem. Most financial reporters spend a lot of time with senior people in the industry. Big firms already can sway coverage by playing the access journalism game and by artful packaging that seeks to frame the debate (or if you are Jamie Dimon, you just go on loudly and confidently about things that aren’t true). And a few notable exceptions, like Larry Summers, people in positions of influence are usually pretty smart and persuasive. I wrote after my visits to the Treasury that it took a day of two to detox. Journalists are in this every day. It’s not hard to see that even ones who are well intentioned are likely to have the relentless barrage of propaganda influence their thinking (although there are quite a few writers that readers can easily name whose pretenses of objectivity is pretty thin).

— Here’s some fun color from a Wall Street Journal on the tallest apartment complex in the Western Hemisphere, newly opened in Lower Manhattan.

Some of the apartments will rent for $60,000 a month:

Above the 52nd floor at New York by Gehry, 50% of tenants earn more than $500,000 a year and 20% earn more than $1 million, Mr. Finn said. The concierge has entertained—and fulfilled—requests for everything from hiring Cirque du Soleil performers for a private dinner party to chartering a private plane for a lobster-tasting.

Read this smart Chrystia Freeland piece over at Reuters on how inequality spurs trickle-down consumption, and features this quote:

“The past 40 years have been the best 40 years for rich people in the history of rich people,’’ Kraus said. ‘‘There is a recognition that we’ve had a pretty good run and now something has got to be done.’’

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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: , , , ,