By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
I have been attempting the vain act of trying to embarrass the New York Times’ DealBook feature into dropping its ethics-free reportage of elite financial crimes. I have had so little success that today’s James Stewart column reached the pinnacle of unintentional self-parody of DealBook’s zealous efforts to remove any concept of ethics from its reportage of elite white-collar crime. The substance of piece is reporting that Steve Jobs “was a walking antitrust violation.” Stewart focuses on the cartel Jobs formed with other giant firms to fix (and suppress) employees’ salaries.
But the title of the piece takes the fact that Jobs was a serial felon who caused great harm to employees and preforms a remarkable transformation in which he is praised as “Steve Jobs, a Genius at Pushing Boundaries.” “Pushing boundaries” is DealBook’s euphemism for Jobs’ crimes that he committed in order to make the already spectacularly wealthy CEO even wealthier – at the direct expense of his employees. And, this being DealBook, and James Stewart being what Stewart has descended to, we have the inevitable claim that Jobs was a “genius” at crime. But it turns out that if you consider the facts reported; he wasn’t a genius. His violations of anti-trust law were obvious crimes. Instead, his key characteristic was the one we always emphasize is critical about the most fraudulent CEOs – audacity. Jobs had gotten away with committing so many crimes that he came to believe he was immune from prosecution.
At this stage in the story, Stewart obviously had to explore at least four ethical issues to explain to readers the significance of Jobs’ crimes. The first issue was the unique danger created by the fact that greed is insatiable. It did not matter how much a plutocrat Jobs became – he always wanted more and was happy to engage in brazen crimes to make him wealthier. The second issue is that he was willing to commit crimes that made him wealthier at the direct expense of his employees. Third, CEOs set the ethical “tone at the top” and when the CEO is a crook he sets a corrupt tone at the top that encourages the employees to commit other crimes and unethical acts that would boost their pay. Fourth, the CEOs of Apple’s top rivals agreed to commit the same cartel felonies as Jobs. This created a “Gresham’s” dynamic that helps other ethical firms (or potential entrants) out of the markets.
As you knew, because it was DealBook and because of the title of Stewart’s column, the column exemplifies the DealBook’s deliberate policy of excluding discussions of the ethical and business implications of elite fraud committed with impunity. This is particularly awkward, if logical consistency were a trait DealBook embraced, given the first sentence of Stewart’s column. “If Steve Jobs were alive today, should he be in jail?” Answering the question “should” inherently requires a discussion of ethics. Stewart, however, is simply being coy – his article never discusses or answers the question he describes as “the provocative question being debated in antitrust circles….” Nor does Stewart ask why that question is being debated “in antitrust circles” rather than in the high tech industry.
But it gets worse, for DealBook states that Jobs “was deeply revered in Silicon Valley.” The fact that Silicon Valley “deeply revere[s]” a serial felon who targeted workers (globally, see my prior columns on China) and shareholders (he secretly backdated stock options in an effort to make himself even wealthier) should be deeply disturbing, even to Deal Book. (I joke: if DealBook had appeared as a character in The Wizard of Oz it would have simultaneously represented “no brain, no heart, no ethics, and no courage.”) Jobs’ CEO counterparts knew about his serial crimes because they were conspiring with him to form the cartel suppressing workers’ wages and because his backdating scam was made public.
We should also stress that Microsoft was found to have violated the antitrust laws (the Bush administration deliberately gutted the remedy for those violations of the law) and that Robert Tillman’s (a prominent white-collar criminologist) empirical work has found that high tech firms were particularly likely to have engaged in accounting and securities fraud. That requires a hard look at Silicon Valley’s culture. While Ayn Rand, von Mises, and von Hayek all stressed the evil of elite fraud and the legitimate, and vital role of the government in acting to deter and punish such frauds, the culture of Silicon Valley is increasingly dominated by wealthy libertarians who are far more radical in their hostility to democratic government, their disdain for ethics, and their opposition to the government preventing fraud. The “Kristallnacht” lunacy is a perfect example of the depraved culture that can emerge when you mix the worst strands of Silicon Valley’s and finance’s contempt for ethics into a single package.
Ethics remains forbidden ground at DealBook. Here’s my question: do its writers have to be told not to discuss ethics, or are they chosen so well that there’s no need to tell them? Are Silicon Valley and DealBook so desperate that they cannot find an honest CEO to revere?