<em>Shadow Elite</em>: <em>Rolling Stone</em>'s Hastings - How Outsiders Provide the Indispensable Check & Balance

Michael Hastings broke the understandings maintained for mutual benefit by the military, reporters who regularly cover it, and perhaps some allied think tanks as well. He did not have special access, he chose to take a risk.
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General McChrystal wasn't the only one buffeted last week by Rolling Stone magazine. So was the news establishment, faced with the fact that a freelance reporter got access to the (former) Afghan war commander and his team, and had the apparent temerity to report exactly what he heard.

Michael Hastings broke custom with some reporters, like CBS Chief Foreign Correspondent Lara Logan who had this very revealing exchange with media reporter Howard Kurtz on CNN's Reliable Sources.

KURTZ: When you are out with the troops and you're living together and sleeping together, is there an unspoken agreement......that you're not going to embarrass them by reporting insults and banter?


KURTZ: Tell me about that.

LOGAN: Yes, absolutely. There is an element of trust.

In Logan's view, Hastings violated the "trust," the "unspoken agreement" that cements the relationship between the military and many reporters. And in doing so, he acted as a consummate journalistic outsider. The role of the outsider, whether in journalism, government or corporate America, has perhaps never been more important as a counterweight than in the current era of the shadow elite. That's the title of Janine's latest book, and in it, she traces the emergence over two decades, particularly since the end of the Cold War, of a new breed of power broker who press their own interests, while purporting to work in the public's interest. To do so, they subvert traditional process, put a stranglehold on (should-be) public information, and exploit the information and influence they gain while moving in and out of roles in government, business, media and think tanks.

The shadow elite are defined by "insider-ism." They work through semi-closed networks, whose member pursue a common agenda, abide by mutual obligations, uphold trust, "understandings," and the "unspoken agreement" that Kurtz underscores. They traffic in information gleaned from exclusive contacts, and use it to both serve their insider agenda and to keep others out. In an age when institutions of check and balance have withered - mainstream investigative journalism, government auditing, many regulatory agencies - the shadow elite are often the only ones who can connect the dots, both in terms of the interests they promote, and their own activities to further those interests. They can also best brand their agenda and activities for the public, with few watchdogs to call them on it.

That means those who try to breach the circle, outsiders - who have any number of personal motives (they are not simply "do-gooders") - may be the only ones standing in their way. They play the indispensable role of questioning the activities of the shadow elite, though some recent examples show that their voices often don't get heard until it's too late, and disaster has struck. Case in point: Brooksley Born, the former chairperson of the Commodity Futures Trading Commission. As one of only 7 women to graduate from her 1964 Stanford Law class, she was used to being an outsider by virtue of gender, but at crucial moments in the 1990's, she had another kind of outsider status. Born stood well outside the Wall Street-Washington-Harvard power clique that believed generally in financial "innovation," and specifically in blocking a proposed regulation of a new kind of exotic derivative, complex financial instruments that Born thought (correctly, as we know now) were dangerous.

By most accounts, Born did not like to be pushed around, and when pushed, tended to dig in her heels. Born stood up against the clique led by Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, his deputy, former Harvard professor (and, years later, Harvard president) Lawrence Summers, and Securities and Exchange Commission Chairman Arthur Levitt Jr.

At a 1998 meeting, Rubin, according to one participant, reportedly said to Born, "you're not going to do anything, right?" Wrong. She continued to fight them, hoping the collapse months later of the hedge fund Long Term Capital Management would serve as a "wake-up call" on the risk of unregulated derivatives. She said that to the House Banking committee - one of at least 17 times she testified before Congress. Born lost the battle, retiring in 1999 to volunteer and pro bono work. And the members of that power clique? Each one, in the spirit of the shadow elite, would go on to take a role at a Wall Street firm, bank, private equity or hedge fund which made bundles on .... unregulated derivatives.

7 years later, another outsider would rattle cages, this time on the risk of subprime mortgages: FDIC chairman Sheila Bair. Bair, who's thought to have political ambitions, was once a bank teller in her native Kansas. According to a New Yorker profile, she respected the bygone culture of small-town banking with its simple, sensible mortgages. But there was nothing simple or sensible about the subprime mortgages that she saw piling up in the years leading into the 2008 crash. Bair agitated the banks to modify loans, and blames Alan Greenspan's Fed for not imposing stricter standards. The New Yorker describes the insider environment of the Washington economic elite:

Advisers with ties to New York banks have dominated both the Bush Administration and the Obama Administration, and Bair has consistently stood out for her skepticism of Wall Street and for her eagerness to confront the big banks. A Kansas Republican, she has become an unlikely hero to economic liberals, who see her as the counterweight to the more Wall Street-centric view often ascribed to Timothy Geithner, the Treasury Secretary.

Another disaster that just might have been averted had outsiders been able to exert more influence: the Gulf oil spill. In this case, the outsiders were EPA investigators up against BP, a company that had massive lobbying power, former top government officials on its advisory board, and a dysfunctional, conflicted and allegedly corrupt regulator - the Minerals Management Service. These EPA investigators went after BP on a deadly Texas refinery fire and two Alaskan oil leaks but they say the Justice Department didn't allow them to go as far as they wanted. One unnamed investigator told Newsweek, "we felt like [these decisions] went all the way to the very top."

One EPA lawyer based in Seattle, Jeanne Pascal, has been speaking out since she retired a few months ago on her efforts to strip BP from government contracts because of its repeated safety violations. Pascal was foiled when she says the Pentagon told her that "BP was supplying 80 percent of the fuel going to the U.S. military in Iraq." Speaking to Newsweek she added, "when a major economic and political giant tells you it has direct access to the White House, it's very intimidating."

Pascal was attempting to breach what one Polish sociologist has called "dirty togetherness," which he (and Janine) saw at play in eastern Europe under communism. The scarcity of consumer goods and distrust of that communist system inadvertently encouraged family, friends, and trusted associates to help each other out through under-the-table transactions - merely to live a somewhat better life. "Dirty togetherness" applies aptly to the shadow elite, but this time it is used to help the powerful become even more powerful. In both cases, one is only as successful as one's insider network. Loyalties are cemented not only by the access to resources and opportunities that their pooled efforts reap, but also by the awareness that they can blackmail one another. In BP's case, those "dirtily together" were the company and its circle of allies: the compromised regulator, the friends in the White House, Justice Department and Pentagon, the hired guns on K-Street, the former top officials paid to sit on boards.

As for Rolling Stone freelancer Michael Hastings, he broke the understandings maintained for mutual benefit by the military, many of the reporters who regularly cover it, and perhaps some allied think tanks as well. The rule is that loose talk among public officials in a casual setting is generally off the record unless stated otherwise.

Hastings of course won instant journalistic fame, but he also took big risks in violating that code. Top officials may now shun him, and if they do, a daily news outfit may be wary of ever hiring him. Think tanks that hire those officials once out of public service may not want him either. As we mentioned, he's facing the wrath of some established reporters who say he's made their job much harder, and broke the code for sensational, not journalistic gain: did the loose talk really say anything about current strategy? For these reasons, Hastings might have short-circuited not just McChystal's military career, but risked circumscribing his own career as well.

So it seems strange when some suggest that a freelancing outsider like Hastings had a luxury that other reporters did not. New York Times columnist Frank Rich sums up the irony well. While "Beltway media heavies and their most bold-faced subjects were dressing up for the annual White House correspondents' dinner," Hastings was overseas, reporting his story.

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