The Failings of Business and Journalism

The recent dismissal of several top officers of Gulf Oil was only the latest episode in a series of scandals that has plagued U.S. business over the past 2 1/2 years. One of the more interesting side-lights of these scandals, which have eroded the confidence of most Americans in businessmen, is how business is reported--and judged--by the press and television. In the following essay, adapted from a recent speech, Louis Banks, visiting professor at Harvard University Graduate School of Business Administration and former managing editor of FORTUNE, addressed himself to the subject.

In baseball, a sports reporter can sense the meaning of an outfielder's single step to the left or right as a new man comes to bat, and he would be thumbed out of his job in two days if he patently did not know what he was writing about. Ditto the drama critic or the police reporter. Yet general-assignment reporters plunge into issues that mean life or death for management, employees, customers--even a community--without the slightest sense of business perspective.

The procession of stories that make the front page or 60 seconds on network television constitutes the daily brush between the run-of-the-mine reporter and the run-of-the-mine businessman, with the latter caught in the glare of the spotlight. Here is where we are fed a daily diet of authoritative ignorance, most of which conveys a cheap-shot hostility to business and businessmen. Here is where the nation sees a persistently distorted image of its most productive and pervasive activity, business. The fact is most general reporters and editors are woefully ignorant of the complexities and ambiguities of corporate operations and thus are easy targets for politicians or pressure-group partisans with special axes to grind at the expense of business.

Some of these newsmen are like kids with loaded pistols, prowling through the forests of corporate complexity to play games of cowboys and Indians or good guys and bad guys. Their only interest in business is to find a negative story that will get them promoted out of business into Woodward and Bernstein. And by and large this is what too many of their editors also want.

Every businessman has his own tale of horror in this matter, and here are only a few:

> At the time of a critical issue of securities, the chief financial officer of AT&T is challenged on his financial policies by a wire-service reporter who, it turns out, does not know the difference between a stock and a bond.

> The chairman of Exxon explains his company's policy in the Middle East for 45 minutes to network television, only to see it compressed to a meaningless 30 seconds.

> A progressive and socially oriented corporation, caught in a long, involved controversy with a small group of employees, has to start all over again on each day's development with a new reporter who has no knowledge except a clipping of the last story.

Students at a Harvard Business School seminar will not soon forget the words of a visiting editor of a metropolitan daily who frankly stated that his happiest moment comes when he has brought a businessman to his knees.

In spite of all this, business and journalism may well deserve each other. Why? Because something serious and menacing has been added to the equation over the past year or so--and is still being added--that makes me cherish the independent, critical coverage of business in whatever form. It is something that, to my mind, shifts the burden of responsibility to the other side.

That something can loosely be described as the post-Watergate disclosures about corporate custom and practice. The net message of the headlines is that chief executive officers of some of the nation's best-known corporations have tolerated practices that range from illegal political payoffs to the subornation of foreign governments, to secret Swiss bank accounts and laundered funds, to colossal short weight in grain sales, to deceiving boards of directors and so on. These are not tawdry little games that can be explained away with a wink but transactions that trespass against the soul of trust in the modern, publicly held corporation: rigging the market and doctoring the books.

How does business respond? A tiny number of businessmen mutter that there is nothing new about all this, and it is just the fault of the goddamned press and TV for stirring things up again. The responsible business community wholeheartedly rejects and repudiates this style of doing business.

But for a long time this business attitude was the world's best kept secret. We did see some management changes--some real and some that looked like window dressing. Then the headlines exploded with the Gulf story. Faced with the evidence of some $12 million in secret payments to politicians in the U.S. and abroad, the Gulf board, at the behest of its outside directors, fired the chairman and two other top executives and demoted a third. We do not yet know the whole story, nor the sum of the damage to the reputation of one of the world's greatest companies--the crown jewel in the constellation put together by the Mellon interests of Pittsburgh.

Even so, it is strange that only two or three members of the business community--among them Irving Shapiro, the chairman of Du Pont, and W. Michael Blumenthal, chairman and president of Bendix--have spoken out on behalf of all business to challenge the lengthening public record, let alone formulate a code of professionalism or ethics to guide future practice. Yet a personal friend, who has helped build one of the world's most successful corporations--one that has never, to his knowledge, passed an illegal coin in order to do business in any of the dozens of countries where it operates--reports that there has been a kind of informal retribution. He says the executives whose names the public has been reading in the headlines and whose faces have been on the tube have become, in fact, "corporate zombies," all but shunned by their business friends. If so, perhaps this is all the retribution we need. But this attitude may be caused more by the implied ethical standards of critical journalism--good, bad and indifferent--than by anything the business community has yet said or done.

If it is true that in the present state of affairs business and journalism deserve each other, the rest of us deserve much better from both of them. And we all deserve better of ourselves. The basic fact about the U.S. is that we are a business society, perhaps a business civilization. Daniel Yankelovich, the attitude researcher, reported with some astonishment over a year ago that 93% of Americans--"just about a consensus--express their willingness to 'make personal sacrifices, if necessary, to preserve the free-enterprise system.' " It might be hard to muster such a consensus even on behalf of the First Amendment. What this indicates is that business leaders must realize that their every decision and action have social and political, as well as economic, implications. Business, in sum total, focuses the major effort of this country, defines the quality of its national life and determines what our children will ultimately think of these times.

Against that 93% consensus for the free-enterprise system, Yankelovich put the more familiar finding that only about 30% of the people have confidence in business leadership. How to explain the difference? Perhaps one could argue that the spread between the 93% and the 30% measures the gap between corporate performance and public expectation in these matters. We do deserve better.

For journalists, the message is much the same. Television and the press powerfully influence our sense of what we ought to do next. We need, value and trust the competent, informed, honest, independent criticism that is implied in the First Amendment, and we have proved its worth over and over again. But today we are drowning in criticism, informed and otherwise. What we need now is the recognition of achievement as well. The late Abraham Maslow, the distinguished psychologist and philosopher, offered a very trenchant warning. He wrote: "If you demand a perfect leader or a perfect society, you thereby give up choosing between better and worse. If the imperfect is defined as evil, then everything becomes evil, since everything is imperfect."

And he went on: "The demonstration that wonderful people can and do exist--even though in very short supply and having feet of clay--is enough to give us courage, hope, strength to fight on, faith in ourselves and in our own possibilities for growth."

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