Audit Notes: Newsweek standards, Luddite fallacy, crowdfunding scams

Everyone but the magazine fact checks Niall Ferguson

Paul Krugman asks:

We know what Ferguson is going to do: he’s going to brazen it out, actually boasting about the deftness with which he misled his readers. But what is Newsweek going to do?

Not much, apparently.

Dylan Byers of Politico talks to Newsweek about its fact-checking process amidst the demolition of Niall Ferguson’s cover story:

“We, like other news organisations today, rely on our writers to submit factually accurate material,” Newsweek spokesman Andrew Kirk told POLITICO.

— Steve Roth of Asymptosis has a thought-provoking post questioning whether the Luddite Fallacy—that technology would replace human workers without adding new jobs—is still valid:

The innovations that the Luddites were facing all delivered massive increases in human utility (via increasingly inexpensive and higher-quality goods and services). So while the losses to particular groups — and their required readjustments — were painful (sometimes horribly so), in the big picture they were overwhelmed by the overall increase in utility.

You just can’t say the same thing about Twitter, or inexpensive heated car seats. The human essentials that early innovations delivered (food, clothing, shelter, medicine, transportation, communication) were massively more valuable than the improvements we’ve seen in my lifetime.

Yes, the utility pie is still getting larger (far more slowly than it was in the past), but the slice that machines can’t provide — especially at the margin — is getting smaller, faster.

Reuters reports that state securities regulators say crowdfunding is emerging as a serious threat to investor safety, particularly after passage of the so-called JOBS Act:

State securities regulators have put the relatively new investment phenomenon of crowdfunding at the top of their annual investment scams list, highlighting a recent controversial U.S. law that relaxed capital raising rules on small companies…

Secretary of the Commonwealth William Galvin, who brought the case, wrote to the SEC urging regulators not to let the JOBS Act changes become a tool for financial fraud and abuse. “Longstanding problems in the markets for small and speculative stocks show the pitfalls of relying on the wisdom of crowds.”

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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: , , , ,