Financial Journalists Fail Upward

If the world of financial infotainment can itself be described as a "market," it is a market where accountability does not seem to exist.
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"Listen, you knew what the banks were doing and yet were touting it for months and months," said Daily Show host Jon Stewart to CNBC superstar Jim Cramer in their much-discussed confrontation last week. "The entire network was, and so now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst."

The applause Mr. Stewart has received for his j'accuse is the sound of the old order cracking. We have turned on the financial CEOs, inducting them one by one into the Predator Hall of Fame. We have gone deaf to the seductive rhythms of the culture wars. We have tossed out the politicians whose antigovernment rhetoric seemed invincible for so long.

And now comes the turn of the bubble-blowers of pop culture, the army of fake populists who have prospered for years by depicting the stock market as an expression of the general will, as the trustworthy friend of the little guy buffeted by a globalizing economy.

We know -- or we think we know -- about the roles played by other culprits in the debacle. The government regulators, for example: How could they have ignored the coming disaster? Well, they were incapacitated by decades of deregulation. What about the market's own watchdogs? Well, from appraisers to ratings agencies the whole tough-minded system was apparently undermined by conflicts of interest.

But what about the syndicated columnists and the beloved stock pickers and the authors of personal finance best-sellers, the industry for which CNBC is the perfect symbol? How did they manage to miss the volcano under their feet?

Mr. Cramer, for his part, had the forthrightness to confess his errors and admit his limitations. "I'm not Eric Sevareid. I'm not Edward R. Murrow," he pleaded. "I'm a guy trying to do an entertainment show about business for people to watch."

But the larger problem won't go away. And it's not just a matter of people missing the biggest economic story of the last 20 years. It's a matter of those who minimized it and those who blew it off because it didn't fit their worldview continuing in their plum positions of authority. Mr. Stewart wasn't rude enough to ask it, but over all his inquiries there hung the obvious question: Why do you still have a job, Mr. Cramer?

If the world of financial infotainment can itself be described as a "market," it is a market where accountability does not seem to exist, where the heaviest of incentives seems to carry no weight, and where consumers, to judge by what they get, seem constantly to choose the lousy over the good. The old order discredits itself, but the old order persists nevertheless.

This needs to be repeated every time someone pleads, "Who could have known?" Plenty of people did see the disaster coming. Most of them were marginalized, however, laboring at out-of-the-way econ departments, blogs and B-list think tanks. They were excluded and even ridiculed because their larger understanding of the economy was not one that fit well with the sort of Wall Street worship preached by the likes of CNBC.

Nor is this a particularly liberal line of inquiry, despite Jon Stewart's well-known fondness for tormenting Republicans. It was a question that interested Milton Friedman, among others, who could be seen musing on the subject in a 1994 TV interview that C-Span chose to rebroadcast on Sunday.

The occasion was the 50th anniversary of the publication of Friedrich Hayek's The Road to Serfdom. As he looked around him, Friedman marveled at the world's perverse refusal to learn certain lessons, even when history itself drove them home. Everyone had by then learned that government was too large, he said, but countries kept on growing government anyway.

Friedman may have misread the direction in which the world was moving in 1994, but the question he raised is still a good one. Bad ideas and clueless pundits often do get on top, and they stay there -- sometimes hailing incentives and accountability, even -- despite all manner of rebukes handed down by history itself.

The reasons the financial-entertainment biz failed us are many and complex, but they ultimately come down to this: In the marketplace to describe the marketplace itself, there is precious little competition. There is a single, standard product that comes in packaging that is alternately sultry, energetic or fun -- bitter, brainy or Cramer "crazy" -- but which rarely strays beyond certain ideological boundaries. Adversarial voices are few. Criticism is sacrificed for access. Advice sometimes shades over into simple propaganda. Even the worst prognosticators sometimes go on to jobs with presidential campaigns or prominent think tanks.

And the small investors whom the personal-financial industry claims so much to adore remain bystanders in a drama they neither understand nor control.

Thomas Frank's column, The Tilting Yard, appears every Wednesday at

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