Paul Steiger, Knight-Bahehot Anniversary Dinner
November 5, 2001
Introduction of Paul Steiger by Robert. E. Burin
Thank you for inviting me to be here tonight to perform the introduction function.
In my view and in the view of many others, the Knight-Bagehot fellowship program represents what business and economic journalism needs to be in the years ahead. The 1990s, as you well know, was a period of enormous change with globalization, the new technologies, spread of market-based economics and relatedly large social, cultural and economic dislocations and now there will be additional dimensions to this environment of change in the wake of September 11. All of this, it seems to me, poses enormously complex issues for business, for policy makers and for you as journalists. One conclusion I took away from my six and a half years in government is how little, unfortunately, the American public understand about how our economy works and how much that paucity impedes sound policy making as well as sound investment and business decisions. The only answer to that paucity is what you do, because the American people learn about our economy from you. Knight Bagehot's mission of raising the standards of business journalism and thereby increasing economic literacy is centrally important in my view to our economic well being and to our national security as well as being important to every individual for their business and investing decisions.
The Wall Street Journal's news pages are highly respected for fostering this economic and business literacy, with their commitment to quality, thoughtfulness, objectivity and accuracy. [The Wall Street Journal also has an editorial section and I think the editorial page is also very interesting.]
I have gotten to know Paul Steiger personally and by reputation over the years, and his leadership as Managing Editor of the Wall Street Journal since 1991 has been outstanding as was his economics and business coverage as a reporter, winning three Gerald Loeb awards and two John Hancock awards. The Wall Street Journal under Paul's leadership has done a hard but critically important job with great distinction, and certainly was strikingly successful in the days after September 11, with the paper's newsroom inaccessible and its neighborhood so badly damaged. Let me join all of you in saluting our distinguished keynote speaker - an important leader for your industry and our country - Paul Steiger.
Keynote Speech by Paul Steiger
Thank you, Secretary Rubin, for a very kind introduction. I never thought I would be introduced by the man I regard as the most successful Treasury secretary in my lifetime - and that includes some pretty outstanding ones, like John Connally, George Schultz and Jim Baker. So Secretary Rubin, thank you. I am honored to share the dais with you.
Thank all of you, also, for attending, and for getting your bosses to take tables in support of a very worthy cause at a time when bosses are tending to be pretty stingy. Thanks also to our dinner chairmen, Michael Carpenter and Rupert Murdoch. I thank you, and the Knight-Bagehot program thanks you as well.
The Knight Bagehot program is by far the best of its kind. It does so much to improve business-and-economic journalism and journalists. I see this first hand. About half a dozen Knight Bagehot graduates are reporters and editors at the Journal, and there are nearly 20 at Dow Jones. You all have been terrifically well prepared for your jobs.
I am honored to be standing before you. Besides those whom I know as valued colleagues, others of you I know as respected competitors, or as news sources. I will use my time tonight to try to stimulate your thinking on issues that have challenged me this year, and continue to challenge me.
In fact, I see the past year as the most challenging ever, in my 35 years as a journalist. The horrific events of Sept. 11 and beyond, of course, have much to do with that, and I will turn shortly to those events and what they mean for us as journalists in general, and business and economic journalists in particular.
But even before Sept. 11, this was an extraordinary year. It has marked the end of the longest and strongest economic and market boom in history - more than 18 years of almost unbroken expansion, starting in the summer of 1982. By the end of 2000, that halcyon period was clearly over. In its place we have a Nasdaq that has crashed, markets in general that have crumpled, an economy that has gone from relentless rise to resounding recession, and a culture that has moved from giddy optimism to skittishness and uncertainty.
In our own profession and the business that supports it, the shift has been particularly quick and cruel. Advertising has fallen precipitously. And the demand for journalists, from venerable print publications to online newbies, has gone from white hot to ice cold. Where last year the watchwords were recruiting, raiding and retention, this year layoffs and buyouts rule.
So now that the great boom is over, what lessons should we as journalists learn from it? I would offer four:
The first is, Don't underestimate the value to society of the boom. Some people will want to view the entire period as one of wretched excess, with the rich enjoying all the benefits while the poor and middle class have been exploited and left in the lurch. There was, of course, some of that. Inequality of incomes and wealth grew over the last two decades. But the families that are rich today include many that were not rich 20 years ago. Meanwhile, we have enjoyed a golden age of innovation, particularly in the fields of information processing, communication, medicine and entertainment technology. Far more important, the sustained period of very low unemployment and the consequent drawing of people away from welfare and into work by companies who needed them did more to help the poor than a generation's worth of social programs.
The second lesson I draw is, Don't beat up on yourself for failing to dissuade some folks for making bad investment decisions during the Nasdaq bubble. Some press pundits argue that business journalists got taken in by the hype of the stock promoters, that we blundered in giving a platform to the likes of Mary Meeker and Henry Blodgett, and that we should have far more sternly warned the proverbial widows and orphans against investing their savings in tech stocks and dot-coms.
These critics endow us with more power than we do or should have. People kept investing in bubble stocks not because they believed some story we wrote or you wrote, but because these stocks kept going up, and they saw that their friends who climbed aboard made easy money. Most reputable financial publications reported the theories of the hypemeisters - and also reported the risk in those theories. Venting theories, even those that seem to us to be cockamamie, is the way we and our readers learn what ideas work and what ideas don't work. Sometimes the lessons come with a price. Unfortunately, when that happens the risk-takers often forget that they were taking a risk. and seek someone to blame.
This doesn't mean that our performance was perfect during the long bull phase. We all need to remind ourselves to be skeptical of conventional wisdom, and equally skeptical of those who tell us the conventional wisdom no longer applies.
There is a particular instance where we may have been sucked into an stock-analysts game to the disadvantage of our readers, and that is the source of the third lesson I draw from the `80s and `90s. It is, Beware of the velvet handshake between CFOs and analysts in setting so-called earnings expectations.
The opening up of corporate management to analysts in recent years has a lot to commend it. At its best, the sharing of information about earnings targets introduces more discipline at companies and greater transparency in how they generate their income. At its worst, it focuses attention on the unimportant - short-run results and this week's stock price - at the expense of what really matters, which is how well the company is positioned to deliver long run value to its investors, employees and customers. We at The Wall Street Journal have in the past been drawn into this game, and we are newly resolved to stay out of it as much as we can.
We are no longer paying so much attention to whether a company is able to meet or beat the Street's estimates. We are downplaying the weird substitutes for net income that more and more companies have come to employ, things like pro forma or operating income, . or cash flow. Instead, we are trying to focus on a more consistent reality: what was net income according to generally accepted accounting principles, and what does management - as opposed to analysts - expect in the future.
The fourth lesson I have learned is, Don't be afraid to try something new. Many of the people who took off to join start-ups a year or two ago are now on the job market, because the start-ups have become shut-downs. That would seem to be an argument for staying put. But in my experience, most of the people who left have broadened their experience and capabilities. When they find jobs, and they will, in some cases at the places they left, they will be the stronger for what they have learned.
This brings me to last of the challenges I wanted to discuss with you tonight, and it is one that easily dwarfs all the others. It is, not surprisingly, how to deal with the myriad ways that September 11 has changed all our lives. It affects us personally, as Americans, because Americans are targets of terror. And it affects us as journalists, because - as we have seen in the anthrax attacks - journalists can be among those specially at risk, because terrorists seek publicity.
But I want to focus tonight on how we deal as journalists deal with the war against Osama bin Laden and his al Qaeda organization.
More and more, Osama bin Laden strikes me as a would-be Adolf Hitler. So in considering how to deal with him in my role not as soldier or politician but as a journalist, I try to think how I would have wanted to respond to the Hitler phenomenon 70 years ago - knowing what I do now about what Hitler became and the horror he inflicted on the world and the even greater horror he might have inflicted had he not been defeated.
I understand that invoking the ultimate bogeyman of the last hundred years may seem a little extreme to some of you. So I want to spend some minutes explaining why I think the linkage is apt.
When Hitler stepped onto the stage in 1920s, most Germans did not embrace him. Many saw him as extreme, even repugnant. But he played masterfully on their grievances, some of which were legitimate. He amplified and magnified those grievances, making the woes of inflation and poverty and political impotence both hugely palpable and not their fault. He advanced a vision in which they would move from powerlessness to ultimate power. He gave them a target for their feelings of victimization, the Jews, and turned that into a galvanizing focus of hate. Gradually more and more Germans endorsed that vision or at least accepted it. They enlisted - or allowed themselves to be enlisted - in carrying it out. The result was the nightmare of Nazism and the systematic murder of millions of Jews and other innocents.
Bin Laden, like Hitler, seeks to mobilize victimhood into hate and hatred into power. He revels in the murder of innocents. He wants to create a theocratic dictatorship with himself at its head, starting on the Arabian peninsula and moving who knows where after that. At his disposal would be a frightening mix of oil and money, nuclear and biological weapons, and millions of human beings - restless, in many cases stateless, seething with frustration and resentment.
It is said that Osama bin Laden is not a manifestation of Islam, but that he seeks to kidnap Islam. The majority of Moslems, we are told, do not endorse the kind of terrorism that he displays. I think that is right.
But I also think that Hitler was not a manifestation of Christianity, or even German Christianity. I am of German ancestry on my father's side, and grew up in the Catholic and Lutheran traditions that predominate historically in Germany. I find nothing in those traditions that upholds genocide. And yet, Hitler was able to enlist millions of my unmet German Catholic and Lutheran relatives in an effort to exterminate the Jews. The horror of that reality is for me both general and personal. Had they succeeded more than they did succeed, my wife, who is Jewish, would not have been born.
And so while it is true that Islam does not equal terrorism, that most Moslems abhor the mass murders of September 11, something else is also true. Many of those same Moslems, particularly in the Middle East, can't help feeling a twinge of satisfaction that the United States and its people can no longer swagger around the world feeling omnipotent and invulnerable. Many of those same Moslems empathize with Mr. Bin Laden's crafty rhetorical jabs at Israel. The possibility is very real that millions of Moslems around the world, under the right circumstances and under scenarios that are not difficult to envision, could fall in behind the Bin Laden banner, some formally and some informally. Moslems who prefer a secular state, or at least oppose violence and terrorism in advancing theocracy, may also feel afraid to stand up.
So the seriousness of this threat, and the importance of the battle against it, has me searching for exactly the right stance to strike in reporting about it. I don't want us in the news columns of the WSJ to be cheerleaders for the war on bin Laden. I don't want us to shrink from reporting the risks we as a nation face and the failures our forces may encounter. But we haven't been publishing, on our website or in our paper, the full text of bin Laden messages. And, like other news organizations, we may have to decide in the future more difficult issues on what to publish, if publishing would endanger American forces or reduce their chances of success. One thing I am certain of: We will never publish anything we know to be inaccurate. Our permanent compact with readers forbids that.
We are just getting used to the fact that the world has changed. We are in a war. When the London blitz began, Britons suddenly were no longer safe in their homes and offices. What we are facing now, as horrible as it has been, particularly in New York, is still nothing like that - and I hope it doesn't get there. But we are at more risk than one could have reasonably imagined a few months ago.
Londoners survived their blitz, and prevailed in the end. I'm convinced that America as a nation -- and more broadly, America as part of a free global culture--will prevail, too. We as journalists have a part to play, not as propagandists, not as jingoists, but as seekers and purveyors of truth. truth that will help people make better decisions about their own lives and the lives they touch. Even in war, that will remain our mission.