David
Cay Johnston, who won a Pulitzer Prize for his innovative coverage of our tax
system, retired this year as a investigative reporter for The New York
Times. He is the author of Free Lunch: How The Wealthiest Americans Enrich Themselves at
Government Expenses (and Stick You with the Bill).
Now that the
House has rejected the $700 billion bailout, what we have to fear is not fear
itself, but fear-mongering--particularly by our leading news organizations.
Katie Couric opened the "CBS
Evening News" last night with video of the House clerk declaring the 205-228
vote, and then she said, "That sets off the biggest decline in stock prices
ever."
Wrong.
Brian Williams opened the "NBC
Nightly News" with the same error, saying it was "the worst single day drop
ever."
These are not
minor errors. They are profound, ridiculous, amateur-hour errors that surely frightened
many people, especially in the context of the tone of the coverage. The stock
market has had much bigger one-day declines. How about right after 9/11? How
about 1987, when the Dow fell 22 percentage points, more than three times the
slightly less than 7 percent drop Monday?
ABC was almost
as bad. Charles Gibson read from his teleprompter words that were technically
accurate, but so misleading that the effect was to instill fear in the hearts
of millions who did not catch the technicality. He reported "the biggest
one-day point drop" in the stock market.
That's scary
unless you know what it means.
As my friend
Fred Brock, one of the best copy editors who ever worked at The Wall Street Journal and The New York Times, said when I read him
the transcripts last night: "That doesn't mean anything; it's utterly
meaningless."
Stock indexes
matter in terms of percentage changes, not point changes, because the base
changes all the time. How many points an index like the Dow or the broader
Standard and Poor's 500 went up or down compared to the day before, or over a
week, or over another contracted time period is a legitimate measure when
trying to figure out the short-term direction of the market. But when you are
comparing it to trading from say 2001 or 1987 or 1929, counting points, instead
of percentages, is absurd.
My first thought
when scanning the nightly news programs was that this was just another example
of how journalists, broadly speaking, are innumerate and so errors pop up when
it comes to numbers. But the subsequent words in the ABC and NBC reports made
it clear that someone on the writing and producing staff knew just what they
were doing. This was not an error; this was fear mongering.
Williams, for
example, reported in the first story segment that "stocks fell off a cliff, the
largest single point drop in history." If someone knew enough to write "point
drop," and later the correspondent Tom Costello used the right measure--the
percentage drop--it suggests the writer of Williams' intro was more interested
in hype than sober facts.
Being
technically correct while creating a false impression does not cut it for
integrity, though. Gibson and Williams owe viewers an explanation and an
apology tonight for misleading them. Even if they did not understand what they
were reading, they are where the buck should stop.
The broadcast
networks were not alone. CNBC, CNN, Fox, and MSNBC all had bumpers with the
"biggest one-day point drop" or some variation. This was especially surprising
on Keith Olbermann's show since he is vigorous in expressing his views, but he
also takes care to check the facts, especially when making fun of fact-free
zones like "The O'Reilly Factor."
But the most
amazing misuse of this meaningless data point was on the front page of Rupert
Murdoch's Wall Street Journal, where
the sober six-column format has been replaced this morning with big headlines
and a story on the bailout that takes up the entire top half of the front page.
The second graph of the lede story reads: "The Dow Jones Industrial Average
sustained its biggest point drop in history and its biggest closing decline
since the day the markets reopened after the Sept.11, 2001 terrorist attacks.
..."
The New York Times, where I spent 13 years, got it right,
though the tone--a two-deck, six-column wide headline--did not signal the kind
of sober restraint to be expected in such uncertain times. The Times also relied on a broader and more
useful gauge than the Dow, which has just 30 companies, to assess the market. The
Times off-lede stated
in its second paragraph, "The broad market as measured by the Standard &
Poor's 500 stock index plunged almost nine percent, its third biggest decline
since World War II."
Fear can become
a self-reinforcing mechanism. It can prompt people who would otherwise just sit
tight to act irrationally. At responsible news organizations, zealous attention
to detail is a core value. I have seen reporters and editors argue over commas,
blowup over a sentence, and, once, a colleague slammed a fist into a wall.
But this doesn't
seem to be a priority right now. So, read the news skeptically. Very
skeptically. And watch to see if Couric, Williams, and Gibson correct their
bush league mistakes tonight.
--David Cay Johnston