Here are a few real ethical dilemmas faced by yours truly:
1) Do I dare write about the NYT's dumb ethics policy? What if I piss off the Times? Oh yeah, I can't write for them anyway, so I guess that's not much of dilemma. (But that calculation does explain why a lot of other people aren't piping up.)
2) I discover that Professor Postrel knows and likes Mary Tripsas. Should I not write about her problems, for fear of hurting their relationship? Should I not say her article wasn't very good?
3) Forbes.com asks me to write something on the occasion of Ralph Lauren's 70th birthday. I admire Ralph Lauren's use of glamour, but the company is in the news for a Photoshop disaster (not glamorous) and Ralph Lauren's most recent, Depression-inspired, collection borders on parody (silver lamé overalls!). For my glamour book, I'm going to want to use one or more photos from Ralph Lauren's ads. Do I write the column, include the recent missteps, and risk not getting permission to use such photos? (I did.)
4) I'm writing a DeepGlamour blog post about disappointing gifts. Do I include examples from my personal experience, at the risk of hurting the gift-giver's feelings? (I didn't.)
Note that none of these dilemmas have anything to do with who pays for what. They're all about relationships.
Posted by Virginia Postrel on December 30, 2009 • Comments
The latest "ethics" scandal buzzing through the journalism blogs provides another reminder that the culture and norms of the traditional journalism guild are ill-suited to the new "FREE" era. But first, a bit of personal context.
Back in June, I got an email from Tim O'Brien, the editor of the NYT's Sunday business section, asking if I'd be interested in writing a monthly column called PROTOTYPE about "creativity and innovation in the business world." I appreciated the invitation and was tempted by the subject matter. But, after a quick calculation, I demurred.
"The subject is certainly an interesting one to me," I replied, a bit snarkily, "but unless the Times has significantly increased its freelance payments and decided that research budgets aren't a waste of money, it's probably not worth the time away from my book writing."
Given my immediate no, our discussions never got far enough to hit the deal-killer: I am, in fact, ethically ineligible to write about innovation for the NYT.
I occasionally do paid speaking for companies that might conceivably be sources for a column on innovation. (Those speaking engagements generally pay quite a bit better than writing for the Times.) As an old journalism pro, I naturally know enough not to take a speaking gig and then turn it into an article, at least not without getting my editor's OK and disclosing any potential conflict to readers. But that's no longer enough for the Times. Its ethics guidelines now prohibit freelancers from taking honoraria or even travel expenses from anyone who might, in some theoretical future state of the world, be a source. In October, "Critical Shopper" columnist Mike Albo, a freelancer, was canned for taking a travel junket that had nothing to do with his NYT gig.
This overly broad policy presents the Times with a major problem that is only going to get worse. The paper wants writers who take no money, including expense reimbursement, from anyone who might conceivably be a "current or potential news source," even on beats unrelated to their NYT writing. The traditional way to achieve this goal was to pay staffers full-time salaries and cover their expenses. But the Times is no longer willing to foot that bill. To save money, it wants to use freelancers with independent expertise, gained through research the Times didn't fund. Yet for well-understood reasons of supply and demand, writers who have independent expertise nowadays rely on in-person engagements (speaking and perhaps consulting) for most of their income. Any freelancer you'd be eager to read on innovation--Michael Schrage, say--is almost certainly someone who also gets paid to share that expertise in person.
To fill the PROTOTYPE slot, the Times turned, as it does increasingly for business and economics coverage, to someone who wouldn't care about its low article fees or nonexistent reporting expenses: a tenured professor with an academic research budget, in this case, Mary Tripsas of the Harvard Business School. She is an expert on innovation, but a journalistic innocent. And now she's in trouble.
Along with some other academics, she visited 3M's innovation center, with the company covering her travel expenses. On Sunday, she published a column about such centers, with 3M's featured in the lead and spotlighted in photos. Charges of ethics violations were soon flying. If Mike Albo lost his slot, media bloggers argue, she should lose hers.
I don't believe Professor Tripsas did anything remotely corrupt. The main value 3M gave her was, in fact, the same thing journalists are bought off with every day: access. The travel expenses were incidental and surely would have been covered by Harvard had 3M not picked up the tab. But she did violate the Times's extraordinarily strict guidelines--guidelines so broad that she arguably shouldn't even have quoted the work of a colleague at Harvard Business School, since she relies on that organization for her salary and benefits.
The real problem was not that 3M covered some of Tripsas's reporting expenses. It's that the column wasn't very good. It lacked context about 3M's long history of internally driven innovation, the work of design consultancies like IDEO, or academic research on customer-driven innovation. It was old news. I wrote about a similar innovation center, at GE Plastics, in The Substance of Style, published in 2003 and researched several years earlier. (Tripsas's column in fact acknowledged that 3M opened its first innovation center more than a decade ago.) And the writing was noticeably cliched and strained: "In a world of online user communities, social media, interactive blogs and other technological means for companies to elicit customer feedback, you might think that face-to-face interaction is a thing of the past. Think again."
Instead of focusing on inputs, the Times should focus its quality control on outputs: what actually appears in the paper. Drop the absurd ethics guidelines, hire freelancers who know their subjects and how to write about them, and disclose any potential conflicts so readers can make up their own minds. Think about delivering value to the reader rather than ritualistically adhering to journalistic guild customs. Alternatively, the Times could shrink the paper to include only that reporting whose costs it can cover out of its own budget and stop trying to free ride.
CORRECTION: I sloppily jumped to a mistaken conclusion about Mary Tripsas's tenure status without actually checking. SMU's David Croson (a mutual friend), emails, "Mary Tripsas doesn't have tenure yet. (Harvard doesn't tenure its associate professors -- one of a very few places that doesn't.) She does, however, have an extremely generous research budget, so your points (about the Times' free-riding, and about HBS being willing to pay if 3M hadn't) seem essentially correct."
ADDENDUM: For those interested in the institutional context, this article (minus a couple of pages) by the eminent HBS accounting professor Robert Kaplan gives a picture of the ideal relationship among research, teaching, consulting, and case writing at Harvard Business School.
Posted by Virginia Postrel on December 28, 2009 • Comments
An article in Sunday's NYT travel section carries the season-appropriate headline, "Brad Pitt's Gifts to New Orleans." The piece suggests, rather gently, that the actor has made a common mistake: giving what pleases him rather than what the recipient wants. The displaced residents of the Ninth Ward would like comfortable, inexpensive, and quickly available houses. Pitt prefers cutting-edge architecture. Residents are grateful for his generosity and good wishes, but their gratitude is tinged with regret for what might have been if he'd heeded their desires.
Gifts are like that. Even the most generous can disappoint. As Cheryl Strayed writes in a terrific essay in the December issue of Allure (alas, in typical Conde-Nast fashion, it's not online):
"My boyfriend gave me a 12-pack of Diet Coke for Christmas!" I occasionally exclaim with glee, now that years have passed since the roil of sorrow and humiliation of that day. That present is little more than a funny memory now, a mere entry in my annals of the Really Bad Gifts I've Received. There was the "electronic guard dog" — a plastic speaker that emitted a screeching bark each time it detected motion — given to me when I had two actual dogs that did the job with authentic verve. There was the book about how to succeed as a financial executive in Japan that I received upon my college graduation as an English major. There were the used bath towels sent as a wedding present by an otherwise sane relative. And then there was the granddaddy of them all: a Weight Watchers gift certificate from my mother-in-law for my birthday when I was eight months pregnant.
Each of these gifts made me believe, in a new light, the old adage that it's far better to give than it is to receive. Receiving sometimes hurts. Bad gifts tell us not who we are, but who the gift givers wish we would be — thinner, say, or a Japanese capitalist rather than an aspiring writer. Or, perhaps worse, they imply that we mean so little to the gift giver that he or she didn't even bother to consider what we might like or need. That's how it felt to receive soda for Christmas.
To be fair, Strayed's mother-in-law very likely chose her gift out of womanly sympathy for the impending struggle to lose pregnancy weight, perhaps even thinking that she herself would have once appreciated such a present. But whatever the good intentions, the gift itself revealed that she knew little of her daughter-in-law's own desires or how Strayed wished to be thought of by others. The gift certificate wasn't just wasteful, like the electronic guard dog. It actually hurt.
The problem of buying good presents for other people, even people you supposedly know well, illustrates that old familiar Hayekian concept, the knowledge problem. If you can't even give your loved ones the right presents, how likely is it that a central authority could make the right decisions for everyone?
Posted by Virginia Postrel on November 30, 2009 • Comments
The Institute for Justice has filed suit to overturn the federal prohibition on financially compensating bone-marrow donors. Megan McArdle has a good post on the subject.
I do take issue with the idea that bone marrow should be exempt from the federal prohibition because, like blood or sperm (but not eggs), it regenerates. The same is functionally true of kidneys, where the remaining organ grows to take up the slack; liver lobes also regenerate.
Posted by Virginia Postrel on October 28, 2009 • Comments
Blunt-spoken, deeply informed, and relentless, Luigi Zingales has been one of the great public-intellectual heroes of the financial crisis. (See this September WSJ op-ed with John Cochrane for a sample of his work.) In this meaty and readable essay for National Affairs, he spells out just how much is at stake in the response to the crisis. Here are just a few small samples from a nuanced and long (by the standards of the Twitter age) essay:
In countries with prominent and influential Marxist parties, pro-market and pro-business forces were compelled to merge to fight the common enemy. If one faces the prospect of nationalization (i.e., the control of resources by a small political elite), even relationship capitalism (which involves control of those resources by a small business elite) becomes an appealing alternative.
As a result, many of these countries could not develop a more competitive and open form of capitalism because they could not afford to divide the opposition to Marxism. Worse, the free-market banner was completely appropriated by the pro-business forces, which were better equipped and better fed. Paradoxically, as the appeal of Marxist ideas faded, this problem in many of these countries became worse, not better. After decades of contiguity and capture, the pro-market forces could not separate themselves from the pro-business camp. Having lost the ideological opposition of Marxism and lacking any opposition from pro-market ideology, pro-business forces ruled unchecked. In no coun- try is this more evident than in Italy, where the pro-market movement today is almost literally owned by a businessman, Prime Minister Silvio Berlusconi, who often seems to run the country in the interest of his media empire.
...
The problem is that people who have spent their entire lives in finance have an understandable tendency to think that the interests of their industry and the interests of the country always coincide. When Treasury Secretary Henry Paulson went to Congress last fall arguing that the world as we knew it would end if Congress did not approve the $700 billion bailout, he was serious and speaking in good faith. And to an extent he was right: His world — the world he lived and worked in — would have ended had there not been a bailout. Goldman Sachs would have gone bankrupt, and the repercussions for everyone he knew would have been enormous. But Henry Paulson's world is not the world most Americans live in — or even the world in which our economy as a whole exists. Whether that world would have ended without Congress's bailout was a far more debatable proposition; unfortunately, that debate never took place.
Compounding the problem is the fact that people in government tend to rely on their networks of trusted friends to gather information "from the outside." If everyone in those networks is drawn from the same milieu, the information and ideas that flow to policymakers will be severely limited. A revealing anecdote comes from a Bush Treasury official, who noted that in the heat of the financial crisis, every time there was a phone call from Manhattan's 212 area code, the message was the same: "Buy the toxic assets." Such uniformity of advice makes it difficult for even the most intelligent or well-meaning policymakers to arrive at the right decisions.
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If the free-market system is politically fragile, its most fragile component is precisely the financial industry. It is so fragile because it relies entirely on the sanctity of contracts and the rule of law, and that sanctity cannot be preserved without broad popular support. When people are angry to the point of threatening the lives of bankers; when the majority of Americans are demanding government intervention not only to regulate the financial industry but to control the way companies are run; when voters lose confidence in the economic system because they perceive it as fundamentally corrupt — then the sanctity of private property becomes threatened as well. And when property rights are not protected, the survival of an effective financial sector, and with it a thriving economy, is in doubt.
The government's involvement in the financial sector in the wake of the crisis — and particularly the bailouts of large banks and other insti- tutions — has exacerbated this problem. Public mistrust of government has combined with mistrust of bankers, and concerns about the waste of taxpayer dollars have been joined to worries about rewarding those who caused the mess on Wall Street. In response, politicians have tried to save themselves by turning against the finance sector with a vengeance. That the House of Representatives approved a proposal to retroactively tax 90% of all bonuses paid by financial institutions receiving TARP money shows how dangerous this combination of backlash and demagoguery can be.
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We thus stand at a crossroads for American capitalism. One path would channel popular rage into political support for some genuinely pro- market reforms, even if they do not serve the interests of large financial firms. By appealing to the best of the populist tradition, we can intro- duce limits to the power of the financial industry — or any business, for that matter — and restore those fundamental principles that give an ethical dimension to capitalism: freedom, meritocracy, a direct link between reward and effort, and a sense of responsibility that ensures that those who reap the gains also bear the losses. This would mean abandoning the notion that any firm is too big to fail, and putting rules in place that keep large financial firms from manipulating government connections to the detriment of markets. It would mean adopting a pro-market, rather than pro-business, approach to the economy.
The alternative path is to soothe the popular rage with measures like limits on executive bonuses while shoring up the position of the largest financial players, making them dependent on government and making the larger economy dependent on them. Such measures play to the crowd in the moment, but threaten the financial system and the public standing of American capitalism in the long run. They also reinforce the very practices that caused the crisis. This is the path to big-business capitalism: a path that blurs the distinction between pro-market and pro-business policies, and so imperils the unique faith the American people have long displayed in the legitimacy of democratic capitalism. Unfortunately, it looks for now like the Obama administration has chosen this latter path.
And to Oliver Williamson and Elinor Ostrom for their well-deserved Nobel Prize in economics. Here's a Times column I wrote about the New Institutional Economics, in which they are major figures. Their work is extremely fundamental. (I discuss some of Ostrom's work on fisheries in The Future and Its Enemies.)
Here's a Reason editorial I wrote in 1997 that hints at why honoring Williamson and Ostrom is coincidentally quite a negative comment on the current rage for technocratic planning: "Conventional political discourse continues to define government as the manipulative determiner of national purpose, but the twin challenges of Third World development and postcommunist transition have revived the fundamental insight of classical liberalism--the idea that government best serves its citizens by limiting itself to enforcing neutral rules."
and the deadweight loss of Christmas, 
by Evelyn Welch (read a 
.)
is Williamson's classic work. (Be forewarned that he is famous for his peculiar jargon. See Stephen Bainbridge's Amazon review.) 
is Ostrom's basic work.