Managers of content-provision corporations — there’s no point any more in calling them “newspaper companies” — are desperate for revenue after enduring print ad losses. So, after 15 years of giving away the milk for free online, they’ve finally mustered up the cojones to at least talk about charging for content on their websites. They speak of this in a language the reporters they’ve fired would never use — the content provision managers talk of monetizing their sites, of incorporating paid-content strategies, of generating additional digital revenue.

And if you believe pay-content impresario Steven Brill of Journalism Online, about 1,000 publishers — er, content-provision specialists — expect to make $900 million at $8.33 a month from the 10 percent of online website visitors Mr. Brill thinks would be willing to cough of up the cash. But an American Press Institute study says only 51 percent of publishers (who voluntarily completed a survey) think they can charge successfully for online content.

But what does “successfully” mean? And who gets to define it? Easy: Cui bono?

Those at the top of many content-provision corporations believe they would benefit. Mr. Brill says he has 1,000 publications signed to non-binding agreements. Others aren’t so optimistic. Consultants for the American Press Institute, in an early study with admitted weaknesses, suggest only readers would only pay $4.64 — nearly halving Mr. Brill’s nearly $1 billion estimate.

Content-provision corporations are eager, nay, slaked with thirst for advertising revenue to replace the dollars that have fled print newspapers. Although a few large content-provision corporations have managed to hold share prices lately despite tumbling profits, managers need that pay-wall revenue to reinvigorate investors who lost a bundle on newspaper stocks over that past five years. (And let’s not forget some argue consortium-set, pay-wall prices are tantamount to collusion in pricing.)

Because sound data to predict pay-wall success, erecting that wall risks revenue flight as much as revenue restored. Respected analyst Alan Mutter (“Reflections of Newsosaur“) has written extensively in the past few months about pay walls. Mr. Mutter says:

But what, publishers rightfully wonder, will become of the other 90% of website visitors – and the $3.1 billion in advertising revenues the U.S. newspaper industry generated on the web in 2008?. … Here’s why publishers are sweating: While Brill argues that newspapers can preserve some 90% of their page views and online advertising after erecting a pay wall, publishers consistently have told me that they fear they could lose 75% or more of their traffic and banner revenue if they started to charge for content.

Readers — at least those who pay the toll to cross the pay-wall moat — get to define success. (Here’s a look at what some smaller, rural newspapers in non-competitive situations have done in terms of content behind the pay wall.) Remember that “Members Only” clothing line of the ’80s? That’s what a pay wall promises: Uniqueness. Frankly, that’s always been a good local newspaper’s strength — unique content. Local news about local people and local issues.

Erect a pay wall. Promise quality, unique, premium content. That’s the formula the content-provision corporations promise. Will they deliver in terms of what the readers accept as a fair exchange for fee paid? It’d be easy to snark here. For example, in May more than half of the 45 million visits to the online Palm Beach Post linked to the police mug shots the Post runs online. (It’s not the only online paper that does this, too. And a host of ethical issues are involved.)

Is this the quality, unique, premium content that lies behind the pay wall? No, not really. Most of that unique content will be locally generated news, features and “service” information — school lunches, entertainment listings. But will that local behind-the-wall content have quality in quantity?

If the pay walls had been erected 15 years ago — even five years ago — then the answer would be more yes than no.

In this still-dawning century, thousands of the skilled, experienced professional practitioners who produced the quality, unique, premium content no longer work for the content-provision corporations. That’s because the corporations fired the producers. To maintain profit levels to satisfy the investors to whom content-provision management sold its collective soul, it cut expenses — firing the professionals it desparately needs now to make good on the pay-wall promise.

A successful business model? Or crap shoot?

Even if content-provision companies have that $900 million fall into their laps as Mr. Brill suggests, which is more likely to happen? Stock buybacks and dividend increases? Or investment of at least tens of millions of dollars into hiring professional newsmen and newswomen to make good on the promise of quality, unique, premium content?

Yeah, right. It won’t be the latter.

Recommended reading:

Alan Mutter’s excellent series on arguments for and against pay walls:

Why aren’t we paying for news?
What stops publishers from charging for news?
How publishers can make Web content pay

Paul Farhi of the American Journalism Review, arguing for reinvigoration of the print newspaper:

Build that pay wall high

Further, during that decade, the newspaper industry has purposely deteriorated its product in a vain attempt to chase the last dram of declining advertising revenue. To do this, it has cut costs in the two principal areas it can — paper and people. Physically, newspapers have shrunk in height, width and number of pages, reducing the amount of newsprint required. In 1990 America’s daily newspapers had 56,900 staffers; 5,900 journalists lost their jobs in 2008; and thousands more have been whacked this year. And it’s the expensive high end of the experience spectrum that the industry has callously discarded. So profit levels remained tolerable to shareholders, but only because of decreased costs — not increased revenue.

And the titans of the industry now say they’re going to charge for a product produced by fewer people with less experience that’s led to far more editing errors and one-source stories that reveal much in their shallowness about the quality of the product being sold? Good luck with leading the paid content charge, Rupert.

Now, the claim that the news product has been disfigured by fiscal folly is admittedly a swipe with a broad brush. But there was a time when readers of many, if not most, newspapers in the United States could point to more than one story in their local paper that exhibited the characteristics of first-rate reporting and writing. These would be stories that provided context, background and meaning beyond the mere reporting of “what happened.” These would be stories fleshed out with color, tone and detail. These would be stories grounded in substance wrought by vigorous reporting, rather than inexpertly daubed with cloying style. These would be stories that a reader would remember — stories by an experienced, competent journalist whose byline a reader would remember and look for in the future.

That’s not true any more. And readers know it. They know when they’re being poorly served. They know when the product loses value yet the newsstand and subscription prices rise. And the prime demographic the industry wishes to reach (because they’ve got discretionary income to spend) has come to know another truth promulgated foolishly by the industry: News is free. Newspapers may place their product behind a pay wall — but that’s no guarantee that readers who have come of advertiser-sought age during the Era of All Media Are Free will actually buy the product.

I don’t know how this seller-vs.-buyer drama is going to play out, but the first act will come soon. I expect larger metro papers, now free online, to institute partial pay walls within a year. Perhaps a consortium of papers, as envisioned by Steven Brill’s Journalism Online, will institute some sort of online subscription or pay-per-story scheme (which might qualify as price-fixing?). I’d bet newspapers have already done readership surveys asking would you pay and how much would you pay. (Wouldn’t you love to see those survey results?) Heck, is this even a well-thought-out business model? Or is it a new biz model, same as the old biz model?

The industry will spend huge sums on Web platforms and promotion. It will spend oodles of dough on technologically particularizing its pay walls. It will spend rafts of money on promoting the advantages of its new superb online news subscription systems.

But how much will it spend on improving its product?

The last decade suggests an answer: Nada.

Good luck with this Brave New Pay Wall World, Rupert.

Newspaper wages rose 2.1 percent from 2008 to 2009, reported Ms. Saba, based on the annual Newspaper Compensation Study by the Inland Press Association using data from 400 U.S. and Canadian papers.

But the folks getting the raises, up to 13 percent for “interactive producers,” are not the people producing the raw content — news stories.

Those employees associated with “new and alternative business development” have seen wages climb by 5 percent, reported Ms. Saba.

But reporters and editorial-page editors — the folks who produce the “product,” the news stories, that the “interactive producers” and experts in “new and alternative business development” are trying to sell — saw flat-line salaries from 2008 to 2009.

Journalists at daily newspapers earn a salary of about $28,000 and those at weeklies about $26,650, according to the 2007 annual survey of journalism and mass communication graduates conducted by Lee Becker at the University of Georgia. Few get rich working as journalists in print newsrooms.

This salary survey offers further evidence that the newspaper industry refuses to invest in what could save it — more and better news coverage by experienced journalists. It has divested itself of the producers of its product by the thousands — 5,900 journalists lost their jobs in 2008 — and given little financial incentive through salary increases to those who remain.

Just more wise management from newspaper corporations …

With assets of $493.2 million and liabilities of $661.1 million, the Strib, as it’s commonly known, certainly qualifies as undercapitalized. (Yes, we know: Declines in print advertising revenues had a great deal to do with this.) Wisely run? Less than two years ago, then-owner McClatchy Co. sold the Strib to a private equity group, Avista Capital Partners of New York, for $530 million.

So what does a gaggle of “seasoned professionals” — whose Web site says its “Global Partnership Strategy of focus, collaboration and expertise in business and investing—will enable us to do more than just make ‘good buys’ in today’s market … and supports management and enhances operational performance, creating real value” — know about newspapering?

Apparently not much, according to Robert G. Picard, a media economist of note:

The bankruptcy filings of the Minneapolis Star-Tribune and Tribune Co. are cast by many as a sign of the continuing decline of the newspaper market. However, it is noteworthy that neither firm is owned by a company with a newspaper heritage, but by firms in the newspaper business primarily for financial gain. The Tribune’s owner is from the real estate business and the Star Trib’s is from private equity. [emphasis added]

Gazillionaire Sam Zell bought the Tribune Co. in 2007 for $8 billion but only put up $300 million of his own money, saddling an employee partnership with debt for the rest. Now, Tribune has nearly $13 billion in debt. Its journalistic flagships, the Tribune and the LA Times, have had substantial personnel losses and enjoy far less journalistic clout under Zell’s “leadership.”

Mr. Picard notes the special relationships newspaper executives have had with the communities in which they operate:

Newspaper companies have long played special roles in communities, exercising social and political influence, and promoting corporate responsibility, accountability, and community standards. Publishers and editors have typically sat with the other civic leaders on boards and committees of chambers of commerce, community development organizations, foundations, and local offices of the United Way and the Better Business Bureau.

The roles and influence of newspaper executives were founded on their standing in the community and of perceptions of their respectability, community interest, and fiscal dependability. Newspaper publishers and editors would loathe any hint of financial instability or impropriety that would mar those views. The reputation of the newspaper and its brand were inextricably linked.

That relationship, frankly, has been soiled for decades as newspaper management became far more concerned with satisfying investors than serving the public interest. That began long ago when investment bankers asked Al Neuharth, then Gannett Co. CEO and founder of USA Today, how to spell “Gannett.” Mr. Neuharth aprocryphally replied: “M-O-N-E-Y.”

Wall Street discovered newspapers had higher profit margins than any other industry. Newspapers were generating margins exceeding 25 percent. So Wall Street bought newspapers to make money — not necessarily to produce great journalism in the public interest. Over time, demands for higher profit margins increased, because large institutional investors wanted the highest short-term returns.

Imagine what newspapers might be like today if, in the ’60s, ’70s, and ’80s, newspapers, either family-owned or chain, had addressed their absolutely lousy pay scales and modernized their physical plants far more than they did. Imagine what they’d be like if experienced newspaper people (and that includes advertising and circulation folks) had continued to run newspapers. Imagine what they’d be like if in the early ’90s bright, newspaper-knowledgeable executives had not laughed at the infant World Wide Web and recognized it as an opportunity rather than a threat.

Mr. Picard points out the consequences:

Newspaper companies have survived depressions, recessions, war, and all kinds of economic uncertainty in the past. They did so because they were financially solid companies with equity structures and balance sheets that allowed them survive very uncomfortable financial circumstances. Companies like the Tribune Co. and Star-Tribune are based on weaker foundations and come from cultures in which bankruptcy to reduce debts or abrogate contracts — hurting local businesses and their own employees — is just another business tool. [emphasis added]

Modern equity-focused executives, as newspapers continue to feel investor pressures from declining returns, refuse to admit the flaws of their short-sighted management. They continue to insist that the newspaper will be as good as ever. Here’s Chris Harte, publisher of the Strib, on its bankruptcy filing:

We intend to use the Chapter 11 process to make this great Twin Cities institution stronger, leaner and more efficient so that it is well positioned to benefit when economic conditions begin to improve. [emphasis added]

Huh? “More efficient”? (Code for “return to higher profits for investors.”) “Well positioned to benefit”? For whom? (Code for “return to higher profits for investors.”)

Just once, why couldn’t a newspaper executive say this:

Our bankruptcy filing is partly the result, of course, of dwindling print advertising revenues. But, I admit, we’ve made some bad decisions as managers. To maintain investor dividends, our short-term focus blinded us to the necessity to improve the product. But to maintain those investor returns, we laid off and bought out the people who would best be able to improve the product. That was kind of dumb.

Not likely to happen, of course. But Mr. Picard, in an analysis he wrote last August, notes that the newspaper industry actually is in good shape:

If one rationally looks at the industry, however, one sees that it is fundamentally sound, but that a unique, financially golden period in its history is ending. It is that change which is creating the bulk of the turmoil in the industry, but the biggest problem is that those working in the industry have short memories about the newspaper business and don’t remember it any other way.

The generation leading newspapers and newspaper companies today has only experienced a period in which extraordinary growth of advertising increased newspaper revenue across the nation. That growth, combined with the development of local monopolies, created a period that enriched papers highly. This, of course, created great interest in investors and produced capital that allowed public companies to grow and acquire papers, driving up newspaper prices and the value of newspaper assets.

Today, the conditions that drove the growth of the past 3 decades are ending, wealth is being stripped from the industry, investors are losing interest, and publishers are struggling with negative and low growth.

The Times (literally) are a-changin’. Stay tuned.

The newspaper business is contracting, much like a hypothermia victim losing circulation in the extremities to protect the body’s core. The recession now swallowing the global economy has accelerated that shrinkage.

Newspapers have contracted in physical size, rate of print publication, ability to produce quality journalism in quantity, reputation for credibility, meaningful participation in public discourse — and, of course, revenue. Their corporate leaders say the lousy revenue’s their problem; therefore, either more revenue or fewer expenses will solve the problem. Well, they’re not getting more revenue. Hence, the contractions.

And that is the problem: The newspaper industry doesn’t recognize what its problem truly is. Well, here it is: Newspapers no longer control readers’ habits.

Once the Christian Science Monitor decided to halt daily print publication in favor of a “new, multiplatform strategy,” other newspapers, big and small, followed suit. Some, like the little Kansas City Kansan this week, went Web-only. The Detroit News acted ambivalently, printing on some days but not on others.

Yes, the online moves will cut costs. Newspaper execs like the Kansan’s general manager, Drew Savage, think this is the future:

We thought maybe this is a trend that could be really viable. It’s the wave of the future. … We’ll be launching a different platform. We’ll have a lot more content than we have ever had. [emphasis added]

More content? How? What kind? The little Kansan, once a daily turned twice-weekly, will cut some of its staff of eight, said Mr. Savage.

Even John Yemma, editor of the Monitor, a newspaper with an admirable record, serves up pablum to explain the change:

The Christian Science Monitor finds itself uniquely positioned to take advantage of developing technologies, market conditions, and news consumption habits that can dramatically increase its relevance, reach, and utility; place it on a sound financial footing; and allow it to pursue its unique mission of providing global perspective and illuminating the human dimension behind international news …

Ditto from Jonathan Wolman, editor and publisher of The News:

We think the strategy can break the cycle of buyouts and downsizing and send us on a path of innovation and growth. And I mean it. With this initiative, we’re laying plans to modernize the daily paper while expanding the immediacy and impact of our digital services.

These newspapers’ expectation for readers is this: Do what we say. Go read the paper online.

Well, sayeth the reader, Why should I?

Readers have known for some time that print-based journalism outlets have delivered less and less for the price they demand. Their daily newspapers have more wire service (and soft feature) copy than local news. Why should readers expect that a newspaper’s “multiplatform strategy” is going to be compellingly better than the print product the company just killed? The contraction in quality of the print newspaper, readers figure, will likely be reflected in the Web site.

The newspaper industry is missing this magic moment. Older, dedicated newspaper readers are searching for new habits to replace the old they’re being forced to surrender. Newer, non-newspaper readers are fully digitized with their Crackberries connecting them to Web, Facebook, Twitter … and so on.

Newspapers are not training readers anew. They’re merely expecting them to behave as newspapers wish them to. That’s as bad a business model as the one that’s now sinking the newspaper industry.

I learned to parse cop code by making daily phone calls to the cops to get the police log — and often walked to the cop shop and read it myself when the damned desk sergeant wouldn’t read it to me. I learned by paying attention to details. I listened to what sources said — always more than one, y’know — and wrote it down. I had a newsroom godfather who taught me well: “Get it right. Period.” I only used anonymous sources three times in 20 years.

One day Editor Bob said he’d heard somebody was going to build a nuclear plant up river. “Find out,” he said. I did. I had to learn how nukes operated in less than two hours before going to the presser for the announcement. I was the only newsman who asked: “Will this be a boiling water or pressurized water reactor?” Hell, the PR types didn’t know. I did. I knew the in’s and out’s of each. Score one for me. I learned the beat quickly. I reported what the utility and the government didn’t want my readers to know. I wore a button given to me by my news editor: “Question Authority.” I found facts — so my readers found out something they needed to know.

I covered the construction of that plant — how it helped and hurt the local economy, whether the utility’s general contractor was using local union labor or bringing in its own non-union crews, what the impact of the finished plant would be on property-tax rates in a very small town. I covered the environmental protests over the plant, learning what happens to fish when warm water is discharged into a cool river. I covered the squabbles over the environmental impact statement and licensing hearings. Then there was the radiation thing …

I covered boards of selectmen and planning boards and school boards and conservation commissions. I did zoning appeals meetings, where commercial interests tried quietly to get land use restrictions altered. Not on my watch: I found out, because my newsroom godfather taught me the law — and showed me the corner of the town-hall bulletin board where the zoning board posted required legal notices in type so small you’d need a magnifying glass to read ‘em. I found out facts — so my readers found out something they needed to know.

I explained why school budgets ballooned. I wrote why property taxes were heading up — again and again. I knew the paper’s readership area, I knew the readers’ interests, and I knew all the back channels of local government. I wrote stories when a town official gave the town’s winter salt contract to an in-law.

Yep, I was a newsman. Began with a typewriter, an old LC Smith, Army surplus. Ended on Hendrix computer terminals with disk drives the size of dinner plates. Even ran a linotype once.

After 20 years, I had accumulated institutional memory of the news and names of 400 square miles of readership area. I had an encyclopedic Rolodex of politicians’ names and numbers, including the bars they drank at (and in some cases, their lovers’ home phone numbers).

After 20 years, I was barely 40, and I knew my craft. I knew the public-service mission: Protect the readers. Find the facts, and tell readers what they need to know.

But in today’s Sam Zell universe, I’d be toast. I’d have been bought out years ago or laid off. I would have become an extraordinary expense in the chase for maximizing shareholder profit. Me and my costly health-care benefits and Guild salary would have been dropped like a fiscally toxic hot potato.

And out the door I’d have gone — with that institutional memory, that massive Rolodex, that 20 years of experience of writing more than 10,000 stories and editing three times that and penning 2,000 editorials and columns. Maybe into PR, like so many have. Or maybe into attempts to try different venues for news, as a few are doing.

Imagine today’s me — the experienced journalist in his or her late 40s, or 50s, or 60s. At the end of the last century, newsrooms were well-stocked with versions of me. No more. Newspaper corporations in their unbelievable arrogance ignored the emergence of the Internet as a competitive force. Newspaper advertisers began switching media allegiances. The trend of declining ad revenue at newspapers has accelerated, complicated by the current dismal economy. Look at these third-quarter numbers:

• Print ad revenue down 19.26 percent to $8.2 billion. (Down 16.07 percent in Q2, down 14.38 percent in Q1)
• Online ad revenue down 3 percent to $749.8 million. (Down 2.4 percent in Q2, up 7.2 percent in Q1)
• Combined is down 18.11 percent to $8.94 billion. (Down 15.11 percent in Q2, Down 12.85 percent in Q1)

The modern me — experienced, knowledgeable, presumably unflappable — is a pricey commodity in a business that’s losing its shirt so badly corporate practitioners are trying to sell off big metro dailies such as E.W. Scripps’ Rocky Mountain News and McClatchy’s Miami Herald. The New York Times Co. wants to mortgage its grand edifice for $225 mill to maintain cash flow — and Sam Zell’s Tribune Co. has filed for Chapter 11. He ran its newspapers and their veteran journalistic abilities into the cold, cold ground of indebtedness.

The modern me is unaffordable. So there are fewer version of the modern me in the nation’s biggest dailies. Staffs at the New York Times and Los Angeles Times and other newspapers nationwide have been slashed.

Yeah, yeah, you say. Heard all this before. So what?

Illinois Gov. Rod Blagojevich, that’s what. The weird case of the bamboozling guv illuminates the weak underbelly of American Corporate Journalism. Writes syndicated columnist Kathleen Parker:

Latest score: The bums are winning. And the corrupt politicians are, too.

Thanks to mismanagement and debt, Tribune’s eviscerated newspapers are riddled with more holes than Al Capone’s enemies, while Illinois holds the nation’s highest gubernatorial incarceration rate. Three of the past eight governors have spent time in jail or prison. Blagojevich would bring the number to four.

If ever The Chicago Tribune’s renowned staff of swashbuckling reporters, cartoonists, editors and columnists (Mike Royko and Jeff MacNelly, RIP) were needed — or more sorely missed — it is now. Not that those still standing don’t do a heroic job, but they know what I mean. Staff cuts and shrinking news holes make it hard to keep pace when the enemy is communing with one’s own generals, as seems to be the case here. [emphasis added]

That’s why more, not fewer, modern versions of me are needed— to keep the Bums from winning. Blago’s a Big Bum, but every newsman and newswoman at a small local weekly or daily know bums like Blago exist everywhere. That’s why I’m still a journalism educator, trying to provide young men and women the education and common sense needed to practice a craft vitally necessary to the conduct of a fully functional and fairly operated democracy.

You know that $700 billion bailout of financial institutions overseen by Hammerin’ Hank Paulson? Outside of a simple pie chart I saw on CNN showing a breakdown of who got what, I don’t know if that dough is really being used effectively, honestly and fairly. I read there’s dozens of federal investigations into the financial markets. How seriously are those look-sees being undertaken by the feds? American Corporate Journalism won’t and can’t cover these things adequately.

And if you think the majority of blogs you read are well-stocked with veteran, experienced professional journalists who can keep tabs on corporate cheaters and government incompetents at local, regional and national levels, send me some of what you’re smokin’.

Some blogs provide useful commentary and analysis. But it takes well-trained, experienced journalists fully supported by adequate organizational resources to find out stuff readers need to know. Good journalism is expensive.

Veteran, experienced journalists find out facts — so their readers find out something they need to know.

Sooner or later, the free stuff online will be precisely worth that price – absolutely nothing.

The media is wrong about AIG.  The $400,000-plus retreat that has everyone so outraged was not for failed executives, but for top-producing salespeople.  Events like this one are common across the US for top salespeople, and there’s a very good reason for it.

I’ve been around way too many salespeople in my life.  They aren’t the most likable bunch unless your idea of a good time is hanging out with greasy gladhanders wearing outsized jewelry who’d sell their children into slavery for a $1.95 order of paper clips.  But I don’t have to like them to understand that they are necessary to keep the money coming in, the economy humming, and the rest of us employed.

I have designed many, many sales incentive compensation plans over the years.  You see, one really great thing about salespeople is that it’s easy to motivate them.  Dangle enough money in front of them and they’ll crawl on their bellies naked through broken glass for you.  It’s like waving a kibble at a starving Rottweiler.  The funny thing, though, is that money, in itself, is not the primary motivator for them.  Prestige, power within the company, and the reputation as a winner are the things they’re really after.  Money is a means of demonstrating that to their peers, who understand this little game all too well (or else they generally get out of sales).

Like most firms, AIG understands that these sales reward junkets — where the company makes a big deal out of salespeople, lavishes praise on them, singles them out from their peers, allows them to hobnob with bigwigs who constantly tell them how important they are to the company — are far more motivating than cash.  AIG could pay cash bonuses to them in lieu of a big get together at a fancy hotel and no one would bat an eye.  But cash bonuses wouldn’t work as well, and AIG (and I) know it.

So, don’t blame AIG for continuing to do business the way business is done.  Meetings like these are a cost of doing business.   Hey, I’m all for firing AIG executives who got the taxpayers into this mess.  But I’m not for firing anyone who understands how salespeople think and is trying to get them to sell more.  Making them stop having these meetings will just force them to increase sales incentive compensation, which will fly under the media’s radar.

And that’s a stupid solution to a non-issue.

Park for a minute and tell us something. After you’re elected president, what are you gonna do with those buffoons running the Minerals Management Service that collects each year oil and gas royalties of $10 billion from oil companies? The Interior Department’s inspector general says top officials there have been involved in “financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.”

And while you’re at it, what about Nancy Nord, the acting chairwoman of the Consumer Product Safety Commission? You plan to let her keep on defending “trips she took that were paid for by the industries that her agency regulates“? You gonna let her keep on telling Congress that her agency does not need a larger budget to police the the industries that produce the nation’s consumer goods?

You know, toxic goods like “the 518,028 tubes of toothpaste [falsely labeled as Colgate] worth an estimated $730,419 that were shipped into the country and distributed to bargain retail stores in several states last year”? Or the 21 million toys recalled because of excessive levels of lead paint?

And what are you gonna do about flip-flopper Stephen L. Johnson, the administrator of the Environmental Protection Agency who says “yes” until the White House, critics say, tells him to say “no”? Mr. Johnson initially told California it could limit tailpipe emissions from motor vehicles at higher-than-federal standards — but, critics say, reversed himself after a nudge from the Bush administration. Yes, he’s the guy who heads an agency that during the Bush administration once produced an annual federal report on air pollution with no section on global warming.

Yes, he was the guy in charge when the EPA — to save industry about $6 million in paperwork costs — instituted a “newly revised Toxics Release Inventory rule [that] will also make it possible for hundreds of large corporations to avoid reporting specific amounts of toxic chemicals they release into the air, land, or water, environmentalists warn.” [emphasis added]

And while you’re at it, do you plan to appoint someone as a commissioner of the Federal Communications Commission just ’cause he was a special assistant to the president, or a member of your transition team, or the general counsel to your campaign? You know, like President Bush did for current chair Kevin J. Martin?

You remember Mr. Martin, don’t you, the guy who faced “a congressional inquiry into the FCC’s procedures and allegations of flawed research studies, suppressing data, ignoring public input and holding hearings with minimal notice”? Yes, that guy, the one who told Congress that there’s no need to make rules to prevent an Internet service provider, like, say, Comcast, from creating “a ‘fast lane‘ for certain Internet content and applications” that would, in effect, create favored tiers of access for some commercial users over others.

And what are you gonna do about Education Secretary Margaret Spellings, who ducked any responsibility for the scandal rattling the $85 billion student loan industry with a bland statement that “We monitor these programs vigorously” and that the system was “crying out for reform”? And what about her work with No Child Left Behind, the 2001 law requiring schools to track the progress of students in math and English? Given that the government never fully provided the states with funding to appropriately enact the law, has it worked? How hard did she actually push for full funding? Should she stay? Go?

And there are so many others. Do you plan to examine the performance of the head honchoes in the Securities and Exchange Commission? Where were the regulators when financial institutions were tossing out subprime loans like candy? Did the SEC act with sufficient alacrity “to examine the role of the rating agencies in lending practices by the mortgage industry”?

You plan to retain Christopher Cox as chairman of an agency that’s supposed to regulate industry? Do you believe him when he says he’s “actively on the lookout for possible securities fraud?” You know, of course, that as a congressman he pushed a bill that would restrict investors’ ability to sue industry? And that as chair, critics fear he’s still pushing to protect industry, not regulate it? Is that the kind of SEC you want?

What about those fine folks at the Office of the Comptroller of the Currency, led by John Dugan? His bio says Mr. Dugan is the “administrator of national banks and chief officer of the Office of the Comptroller of the Currency (OCC). The OCC supervises about 1,700 federally chartered commercial banks and about 50 federal branches and agencies of foreign banks in the United States, comprising nearly two-thirds of the assets of the commercial banking system.” Hmmm. Big banks are tumbling fast and furious. You gonna keep him?

What about the Nuclear Regulatory Commission? It will become more on the spot as the nuclear power industry gears up to do its self-promoted part in ending our reliance on foreign energy sources. What about those agencies with lots of words in their names that deal with transportation safety in the air, on land and over the water? ‘Cause you know, of course, that the nation’s infrastructure is screwed up beyond belief. Who’s gonna fix it for you? And are you gonna keep on selling off interstate highways and other infrastructures to private investors instead of refurbishing them?

And was creating the Department of Homeland Security really a good idea? Who’s gonna untangle that debacle? And, sheesh, who are you gonna name to run FEMA?

C’mon, Barack. ‘Fess up, John. You are fully aware that as president you determine through your constitutional appointment authority how your administration functions through the roughly 2,000 people you name to administer federal departments and agencies.

So back off those lame, endlessly repetitive stump speeches. If you continue to claim the federal government is a) inefficient, b) too large), c) too small, d) ineffective or e) all of the above, talk turkey. Name names. Tell voters precisely the credentials and qualifications you’ll be checking off on folks who apply to work in your administration.

You’ve been lucky so far. The big-time media “analysts” and “commentators” and “contributers” and “anchors” have let you off the hook. You get to divert our attention from the core of governmental chaos by talking only about gay marriage (good? bad?), Iraq (in? out?), Supreme Court appointments (no litmus test?), elitism (him, not me!), education, (more teachers now, please), crime (more police now, please), illegal immigration (it’s really bad, of course!). You get to avoid most of what really counts.

So give us the real red meat. Who’s really gonna run the government? Tell us.

And we know you’re not going to be personally sifting through a gazillion résumés to fill thousands of government posts. So who’s gonna do that?

Your “transition team,” of course. Why don’t you tell us now instead of after the election whom you’ll appoint to that team? The makeup of your transition team will tell us much about the qualifications you’ll be looking for in your administrative appointments.

But, of course, you won’t talk about this. Presidential candidates rarely do. And our wonderful media, far more interested in personalities, horse races and conflict (because conflict is what really sells papers and pumps up TV ratings), will harrumph, harrumph mightily and ask more stupid questions that you pretend to be offended by.

You’ve really got it easy, don’t you?

I give up. I’ve collapsed under the oppressing weight of lies, prevarications, deceits, “policy adjustments,” rhetoric, no-longer-operative statements, attack ads, Perino-isms, cunningly packaged spin, and Rovian stump speeches with the rhetorical content equivalent to the unflushed contents of a toilet bowl.

Would someone please make possession of a Teleprompter a federal crime, punishable by listening to Rush Limbaugh 24/7 for life? Or Al Franken, for that matter? Can we stop the incessant harangue so reminiscent of “Father Knows Best” or, in the event Sarah Palin is speaking, “Mother Knows Best”? Or Hillary or Bill: “We Know Best”?

Now, if you do what I did for a living for 20 years (that journalism gig) and get enough advanced degrees and then do the professor shtick for 15 years, presumably you have the intellectual capacity and analytical ability to ferret out the posings of these all-knowing rodents.

But it’s too much. This pervasive, invasive crap comes at you in massive waves of media-borne and commentator-massaged messages crafted with a solitary purpose — to take something from me. It might be a vote. It might be money. It might be my soul. But they want something, and they’re willing to suspend any code of morality to get it. And you know who they are, don’t you?

I surrender. They win. The constant rush of words blending into a sheen of believability (polished quite nicely by those big-name “journalists” or CNN “contributors” purporting to “interpret” those words for the appropriate “truth”) has exhausted me. As the Borg said, “Resistance is futile.”

Because so many “sources” who have anointed themselves as “credible” have told me carefully orchestrated, artfully documented “truths” for so long, I no longer need to independently understand or articulate the political, social, cultural and economic “truths” around me. I now depend completely on them to tell me the “truth.”

They tell me whose fault everything is. So I blame whom they tell me to. They tell me whom to fear, so I’m afraid of those they tell me to be afraid of. It’s not that I no longer need to be told what to think and what to think about, it’s just that it’s become so much easier to be told rather than to choose.

When Telepromptered “truth” pours forth, I’ll simply look for the applause sign and clap when it tells me to. Yeah, that’s it. I’ll look for that neon sign that signals me that the “truth” is about to stride onto stage.

It had better be careful, though. That stage is already crowded.

Moral coda: Don’t. Trust. What. They. Say.

image credit: The Truth Group

With the bailout of Freddie Mac and Fannie Mae, the Reagan revolution has at last realized the robber barons’ dream: privatize the profits and socialize the debt. Nicely done, fellas.

— a letter to the editor of The New York Times from Candida Pugh of Oakland, Calif.; Sept. 10; emphasis added.

We now see the compensation wasn’t deserved. I don’t think taxpayers want their money to go to the C.E.O.’s of these very large institutions.

— Sen. Chuck Schumer, D-N.Y., on the exit pay packages of Daniel H. Mudd of Fannie Mae and Richard F. Syron of Freddie Mac who, The Times’ Eric Dash reports, are eligible for as much as $24 million in severance, retirement benefits and deferred compensation; Sept. 10.

The report says that eight officials in the royalty program accepted gifts from energy companies whose value exceeded limits set by ethics rules — including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game.

The investigation also concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.”

— from a Times story by Charlie Savage on reports filed with Congress by Earl E. Devaney, the Interior Department’s inspector general, on “wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes”; Sept. 10.

Education is obviously not the issue Senator McCain spends the most time on. He’s been a quiet and consistent supporter of parents and educators who he thinks are making a difference.

— Lisa Graham Keegan, a McCain adviser and former Arizona education commissioner, explaining the brevity of presidential candidate John McCain’s education plan but suggesting that it should not be interpreted as a lack of commitment to education; Sept. 9.

I’m really frightened. I’ve been in blizzards and tornadoes, but never a hurricane. It’s frightening, but if the Lord’s going to take you, he’s going to find you wherever you are.

— Ginger Saracco of Galveston, Texas, after watching a storm surge from Hurricane Ike slam into a seawall; Sept. 12.

That project is moving right ahead. The money for that project was not diverted anywhere else. … So (for her) to say she said, ‘Thanks, but no thanks….’ I would say she said, ‘Thanks!’

— Tony Knowles, who served as governor of Alaska from 1994 to 2002; an Anchorage Daily News story by George Bryson says Republican vice presidential nominee Gov. Sarah Palin “still supports spending $400 million to $600 million on ‘the other Bridge to Nowhere,’ the Knik Arm Crossing, which would provide residents in Palin’s hometown of Wasilla faster access to Anchorage” according to Gov. Knowles; Sept. 11.

[Gov. Sarah Palin] strikes me as a target-rich environment.

— Saturday Night Live writer James Downey; Sept. 12.

He was on the wrong side of the rope line. It is a decision that is hard to comprehend.

— Sen. Frank R. Lautenberg, D-N.J., about former Democratic Sen. Joseph Lieberman’s visibility as Republican pitchman for Sen. John McCain; Sept. 9.

YouTube was being used by Islamist terrorist organizations to recruit and train followers via the Internet and to incite terrorist attacks around the world, including right here in the United States. I expect these stronger community guidelines to decrease the number of videos on YouTube produced by al-Qaeda and affiliated Islamist terrorist organizations.

— from a statement by Sen. Joseph Lieberman exhorting YouTube to ban videos that “incite” violence; YouTube agreed to ban some content in response; Sept. 12.

Your prayers reached where they were meant to reach. The truth prevailed.

— Jacob Zuma, president of the African National Congress, as his theme song, “Bring Me My Machine Gun” played, after a South African judge threw out “racketeering, corruption, money laundering and fraud [charges] related to a multibillion rand government arms deal in the late 1990s”; a New York Times story says “A court in Durban convicted Mr. Zuma’s business adviser of funneling about $170,000 to Mr. Zuma in exchange for help in winning contracts”; Sept. 12; emphasis added.

[I will not] respond to the garbage from the American empire.

— Tarek El Aissami, appointed Venezuela’s interior minister on Monday, responding to a report by The Times‘ Alexei Barrioneuvo that “[a] conspiracy to cover up the intended recipient of a suitcase filled with $800,000 in cash found in Argentina last year reached the highest levels of Venezuela’s government, with President Hugo Chávez ordering the head of his intelligence service to handle the situation” according to court testimony; Sept. 9.

These settlements are a major step forward in cleaning up an industry where false and misleading advertising practices have been all too rampant. It is unconscionable for lenders to entice students into loans that are not best for them.

— Andrew M. Cuomo, New York’s attorney general, on a settlement with seven student loan companies that outlined a code of conduct and required that “a total of $1.4 million [be placed] into a fund to help educate students and their families about financial aid,” reported The Times‘ Johnathan D. Glater; Sept. 9.

That statute is unconstitutionally overbroad on its face because it prohibits the anonymous transmission of all unsolicited bulk e-mails including those containing political, religious or other speech protected by the First Amendment to the United State Constitution.

— from a ruling by the Virginia Supreme Court today striking down the commonwealth’s “anti-spam” law after reconsidering the conviction of Jeremy Jaynes of Raleigh, N.C., the first person tried under the law, convicted of sending tens of thousands of e-mails through America Online servers, and sentenced to nine years in prison; Sept. 12.

Q: With another anniversary of 9/11 upon us, how does the President feel about the failure to find Osama bin Laden?
MS. PERINO: President Bush has been working and directing thousands of men and women across our intelligence community to help us find Osama bin Laden, his deputies, and to disrupt plans to attack America again, wherever they might be plotted. He has not let up on that, and that fight and that hunt will continue to go on until he is brought to justice.

— exchange between reporter and press secretary Dana Perino at a White House briefing; Sept. 10.

The Republicans talk a lot about experience. When you’re the author, architect and enabler of eight years of devastating foreign policy mistakes, that’s not experience. It’s very bad judgment.

— Senate Majority Leader Harry Reid, D-Nev., arguing that Sen. John McCain, R-Ariz., lacks the temperament and judgment to be president; Sen. Reid said, “Our dangerous world calls for leaders with sound judgment, not those with a temperament prone to recklessness. Our country deserves more than token shifts and lip service to change. We need to take decisive action to reverse eight years of foreign policy mistakes”; Sept. 12.

Now let me review some of the descriptive phrases that have been used by some of you that have made my own personal interfaces with the Press Corps difficult: “dictatorial and somewhat dense,” “a liar,” “a torturer” “does not get it.” In — In some cases I have never even met those that use those comments. Yet they felt qualified to make character judgments that are communicated to the world. My experience is not unique and we can find other such examples as the treatment of Secretary Brown during Katrina. In my opinion, this is the worst display of journalism imaginable by those of us that are bound by a strict value system of selfless service, honor, and integrity.

— from an address to the Military Reporters and Editors Forum Luncheon by Lieutenant General (Ret.) Ricardo S. Sanchez; Oct. 12, 2007.

Q: Is Osama bin Laden as important now as he was seven years ago?
MS. PERINO: I think that what we have tried to do is disrupt any area from becoming a safe haven where terrorists could plot and plan attacks. The leadership of al Qaeda has largely been replaced over the years, but they have more people that keep coming up through the ranks and are trained to plot and plan against us. I think — the President believes it’s important for us to hunt and track down and bring to justice Osama bin Laden. And it would be important for Americans, but it’s important for justice most of all.

— exchange between reporter and press secretary Dana Perino at a White House briefing; Sept. 10.

The rise of a free and self-governing Iraq will deny terrorists a base of operation, discredit their narrow ideology, and give momentum to reformers across the region. This will be a decisive blow to terrorism at the heart of its power, and a victory for the security of America and the civilized world.

— from an address by President Bush at the U.S. Army War College in Carlisle, Pa.; May 24, 2004.

I’m sitting at Eros, a Greek diner on Seventh Avenue, loving my omelette as I seek shelter from the rain, when I see a busboy remove a container of dirty dishes — with a copy of my review in today’s paper on top. Get it while it’s hot, I guess.

— from the “On The Runway” blog of New York Times fashion critic Cathy Horyn; Sept. 9.

photo credits:

• Hurricane Ike hits Galveston: Associated Press
• Sen. Joseph Lieberman leaving stage: Damon Winter, The New York Times
• Sen. Lieberman mug: Alex Wong, Getty Images
• Steve Jobs: Daniel Acker, Bloomberg News
• Gap models: Marcio Madeira, Style.com

Quotabull is a weekly feature of Scholars & Rogues.

However, what the Green Constitutional Congress lacked in focus it generally compensated for with interesting information coming from the panelists themselves. And in some way, nearly everything said during the congress was tied back to three main ideas – awareness, externalities, and imagination.

Bruce Mau first brought the idea of awareness to the audience in his long, rambling, and unfortunately monotonous opening monologue. Specifically, Mau said that spin and advertising have become obsolete in this era of instant verification. Mere message control is no longer sufficient, a fact that our elected politicians and businesspeople are only now coming to realize. Instead, the only way to control your own message about your actions is to actually perform those actions in the way you say are going to – anything less will be picked up by critics and distributed around the world for everyone to see. Panelists Charlie Cannon, David W. Orr, and Bill Becker talked at some length about awareness regarding their particular areas of expertise.

Most people in the United States don’t want to be aware of the systems that they rely upon to make their lives possible. Collectively, these systems are usually called infrastructure, a word that provides no clues as to the importance of its subject matter. Infrastructure include the roads, rail links, and bridges we use to transport ourselves and our goods around the country. It includes the dams, water treatment facilities, water mains, and sewer connection that bring us our water and carry away our wastes to be treated. It includes the power plants and electricity transmission lines and natural gas pipelines that we need to keep our homes heated and cooled, our heavy industry productive. Industrial designer and educator Charlie Cannon, however, wants us to drag infrastructure into our awareness instead of leaving it to languish in the collective unconscious until the flooding of farmland and productive neighborhoods becomes commonplace, until the loss of lives and economic productivity due to the collapse of a major bridge becomes a regular disruption. These “invisible” systems are facing a crisis and will need to be rebuilt over the next few decades, but the first necessary step toward getting them rebuilt is to make all of us aware of them.

Education was once a high priority topic, but has languished and been pushed off to the back burner more times than it should have. Hot pans on the back burner tend to burn or burst into flame unexpectedly, and in recent years, the problems in education have led to a plethora of solutions, some actually effective, others entirely counterproductive. According to former principle and Oberlin College education professor David Orr, however, there’s a general lack of awareness that all the solutions are addressing the wrong problem. Instead of solving the problems in education, educators, administrators, unions, and policy makers should instead be tackling the problem of education. Orr believes that too much time and money are being spent tackling problems with an Enlightenment-era educational system instead of retooling the educational system from the ground up for a post-Enlightenment, eve post-Modern, world.

In the last two years, the dangers of global heating have been illustrated to the American people in ways that are difficult to ignore. Accurately or otherwise, the floods in the Midwest this spring, the giant wildfires that have plagued San Diego in recent years, and the pine forests of the Rocky Mountains succumbing to an insect pest that once was kept under control by harsh winters that have turned mild by comparison are all held up as visible examples of how global heating is already affecting the United States. But even as awareness has grown, Bill Becker, executive director of the Presidential Climate Action Program, still thinks that the public isn’t yet aware enough of the dangers. Multiple organizations have declared that global heating is national security issues that the country will face over the next few decades, yet the public perception is that “Drill here, drill now, pay less” is actually a viable national security strategy. Instead, Becker said, we’ve reached a point where “a photovoltaic panel is as important to national security as an M-16 rifle, and a plug-in hybrid vehicle is as important to national defense as a tank.” Similarly, Americans are unaware that even oil executives believe that we’ve hit peak oil production and that oil prices will trend dramatically upward (with occasional short-term price corrections, as we’ve seen over the last few weeks) from now on.

Next: Part 2, Externalities

No-one who watched Usain Bolt actually break stride, look around, slow down and beat his chest in victory 15 METRES BEFORE THE LINE could have any doubt that you are watching a supreme athlete.

Athletes are the supreme example of physical genius. An injury – one that regular folk wouldn’t notice – is something that threatens to shave 0.2s from your finishing time. A massive difference in the world of competitive sport.

The difference between free people and collectivists is never so clear than at the Olympics. During the Cold War, the USSR treated the event as a political endeavour. Heroes were less important than the shear weight of medals that they built up. In this Olympics, the Chinese are no different. Their government-funded, highly-sophisticated sports schools mould some 370,000 students a year. It is no wonder that they are able to claim so many victories in so many sports.

Governments can make up in volume, what they lack in showmanship. But they do not create heroes. And we love watching heroes.

The joy of competition

Fairness means different things in different contexts. Many people were disappointed when Bolt showboated the last 15 meters of the 100m. “He should have given it everything. It cheats the viewer,” said many.

We hate it when athletes cheat. When they take performance enhancing drugs, or somehow get an unfair competitive advantage. We don’t mind that athletes can be assholes. That they can be full of shit and arrogant. We’ll forgive any amount of tom-foolery … as long as they are the best.

Then we celebrate them, throw them parades and name our children after them. They become our great role-models. They are invited to our schools. They tell our kids to believe in themselves and to give their moments of competition absolutely everything they’ve got.

We love it when great athletes try to psyche each other out. Faking an injury on the football field. Staring each other down. We tell each other that sport is as much a head-game as it is physical. Who’s going to crack under the pressure of the final, of millions of people all roaring the names of their heroes at the same time?

And we demand that competition. We want to see them suffer. We want to see them burn. We demand that it hurt. And that they overcome all this. For this is what makes a hero.

When athletes cheat, they discredit themselves, but not their sport. In 1998, the entire Festina cycling team was turfed out of the Tour de France. The tour has had a regular problem with doping. US hopeful, Floyd Landis, actually won the tour in 2006 before being stripped of his title. The competition is so ferocious that there are few sports that can claim to have no moments of travesty. From Maradona’s “Hand of God” in the 1986 Soccer World Cup, to the Chicago White Sox throwing the World Series in 1919, to Ben Johnson’s 100 meters in the 1988 Olympics.

But the lying and cheating does not, usually, discredit the sport itself. We love our favourite sports. Our passion is all. The athlete may be humiliated and punished, but the game goes on.

But it all breaks down

There is another breed of people who are supremely gifted. Astonishing athletes. But not of the body. These are athletes of society. The great businessmen and entrepreneurs.

They too compete at the highest level for fantastic stakes. The winners stand to make a fortune. But they stand alone.

Henry Ford, creator of the Ford Motor Company; Henry J Kaiser, creator of the HMO; Ray Kroc, the genius behind McDonalds; JP Morgan, investment banking hero. None loved. None celebrated. It is only in recent years that we have found some, a small handful, of great entrepreneurs we are prepared to celebrate. People like Richard Branson of the Virgin Group, or Steve Jobs of Apple. But their compatriots, who have achieved as much, been as creative and excellent – Bill Gates of Microsoft, Sam Walton of Wal-Mart – are loathed and hated.

Anyone who has read Lance Armstrong’s “It’s not about the bike” could be left in any doubt about the concentration, ability and self-sacrifice required to win seven Tours de France. Neither would you be in any doubt that the man is an asshole and a prima donna. That doesn’t matter; he’s still a sporting hero.

Unlike Bill Gates and Microsoft, who is probably the most vilified man on the Internet (after George W Bush – not an entrepreneur).

Business is just as competitive as sport, if not more so. The stakes are as high, the margins as thin. It really does mean the difference between having a globally successful business if you choose to outsource your call-center to India, and going into Chapter 11. It really is important to have a good strategy, great marketing, supreme design and astonishing distribution. In which case you could have Apple or Wal-Mart or Tesco or Toyota. Or, they can be dragged down by bad management, following bullshit strategy and cheating their investors, like Enron or Parmalat.

Management fads are like coaching fads. Business strategy is like sporting strategy. It’s a head-game too. Can I out-psyche my competitors and my customers. How razor-thin can I walk the line to get ahead?

Like in a motor-race, the consequence of a fraction too fine can be awful.

But don’t ever doubt that the men and women who lead the world’s most successful companies are astonishing athletes who do what they do without applause and whose only means of measuring victory is the money in their pockets.

Maybe you think that the most outstanding business people are paid too much?

Steve Jobs of Apple earns around $ 122 million a year; Ray Irani of Occidental Petroleum earns around $ 86 million a year; Barry Diller of AIC earns $ 85 million … these are the top three highest-paid executives in 2007. The average remuneration of the CEOs of the 500 top companies is around $ 14 million a year.

In the same year, 2007, Tiger Woods was paid $ 100 million, Oscar de la Hoya, $ 43 million, Phil Mickelson $ 42 million. Yet the highest paid executives create, and sustain, thousands of jobs. How many jobs does Woods sustain?

So, why the friction? Why the loathing of our greatest entrepreneurs?

Adoring the game, loving the sport, celebrating the hero

There is a difference, of course. Partially, it is because executives mostly do what they do outside of public sight. It’s also because athletes don’t compete with you, and your only connection with them is on television.

Try and imagine what it might be like if every walk to the shops became a race against Usain Bolt? If your swim at the public pool was a challenge against Michael Phelps? If your every single moment you were confronted with the Olympian efforts of the best in the world?

Chances are you might start finding watching sports on television downright alarming.

Business is tactile. It’s immediate. The highly-paid executive is making a profit when you’re buying his product. You might resent that. You’ve seen the big-deal business get-togethers. Steve Jobs in front of thousands of people, launching the iPhone? Steve Ballmer pumping up a crowd at Microsoft? How about them oil executives discussing their exceptional profits on CNN Money while your tank of gas goes through the roof?

Makes you angry, doesn’t it? ‘Cos there – right there – it’s not a game. It’s your wallet. How dare they get so rich at my expense?

Except it isn’t.

Cards on the table. I love business. I adore it. The minutiae of pricing and packaging and distribution. Of design. Of cutting off a competitor. When Pantene was due to launch in South Africa and ran three months of adverts announcing the fact that their shampoo was going to change the country, I absolutely cheered when Organics – a rival shampoo maker – released A WEEK BEFORE PANTENE LAUNCHED a promotion selling TWO LITRES of shampoo for next to nothing! It’s genius. It’s brilliant. I still grin when I think about it.

I mean, sure, the Pantene investors must have felt like they’d received a groin-shot. There’s your expensive campaign undercut at the last minute by people who ran out to buy liters of your main competitor’s product. They wouldn’t need more shampoo for months and your whole launch strategy collapses right there…

You don’t think consumers benefited from this? Of course they did. The pure, unconstrained competition between business rivals lowered prices and increased quality.

The only time that it doesn’t is when some distortion in the market protects an incumbent. Either when they cheat, or when the game is rigged.

That is reason to hate the cheater, not the game itself.

Cheaters sometimes win

There are two ways the game can be rigged. Either a company can outright lie and use their size and muscle to bleed their competitors and consumers. Like Enron, like Parmalat.

Or, the government can skew the game in their favour. When the US government gives direct subsidies to the biggest farmers, they bias the market against small farmers. When lawmakers subsidize coal-plants and oil-producers, they distort the game against alternative fuels. When subsidies prop up car-makers and tariffs are levied against foreign manufacturers, it raises the prices of vehicles for consumers and props up weak competitors. When steel-makers get tax cuts, then other people have to pay higher taxes to make up the difference.

There are lots of ways that business is biased.

Instead of blaming business as a whole, blame the cheating. Work and campaign and challenge politicians to make businesses sweat and compete. And demand that competition. We want to see them suffer. We want to see them burn. We demand that it hurt. And that they overcome all this. For this is what makes a hero.

Yes, that does mean that some jobs will be outsourced to other countries but, you know what, it will result in new jobs that didn’t exist before. Look at sport. Usain Bolt’s victory does not deny other people their best times in the same event.

I’ll give you an example from my own research in South America in 2004. In Lima, Peru there is a garment district called Gamarra. In the 1960s, the Peruvian government decided to kick-start the economy with a state-driven textiles initiative. They took over this suburb in Lima and set it up. It didn’t work, becoming a desolate hell-hole frequented by gangsters. In 1983, they gave up and handed it over to private enterprise. There are now 18,000 businesses there. 600,000 people visit the place a day driving revenues of $1.2 billion annually in 34 city blocks. The government, as that link shows, claims the victory, but the people I interviewed in the business sector shook their heads. It was all them.

The lesson is this: when you sit on something and protect it, you exclude the opportunity for something miraculous to happen. The Chinese control their sport, they win lots of medals, but miracles don’t happen.

When you protect an entire industry you do so at the expense of what might happen if you didn’t. The Soviet Union protected their entire society from competition and change. When the walls came down, Westerners were living in the 21st century and they were living in the 19th.

There’s a joke about Soviet motor-cars. A worker has saved up for years and has finally been allowed to apply to get a motor-car. He walks to the nearest motor-factory and queues for several hours to buy. Eventually the factory foreman stands before him. He pays. “Come back in seven years on the 15th of July,” he is told. He isn’t asked for what type of car he’d like, or what colour it would be. He will take what the factory produces.

“Should I come in the morning or in the afternoon,” he asks.

“Why should that matter?” asks the foreman, in surprise.

“Well, that’s the day the plumber said he would come round to fix the washing machine and I don’t want to miss him,” says the man.

Loving it anyway

Who is the most popular Chinese athlete? Yao Ming, who plays basketball for the Houston Rockets in the NBA. And despite all the Chinese victories at the games, Usain Bolt winning the 100 meters for himself and for Jamaica will stand out for me as the highlight of the 2008 Olympics.

Yes, businessmen cheat. Yes, it’s fucking outrageous. Yes, it should be stopped and the bastards should go to jail. But it doesn’t damage my love of the game. Of business as the highest social ideal I can think of, just as Olympic sport is the highest physical ideal I can imagine.

I love watching a great athlete perform wonders. My heart soars when I listen to the finest musicians perform at their peak. My blood pounds when great actors tear the screen up and make me celebrate their craft. And when I hold a brilliant product – like an iPhone, or a Gillette Fusion, or a Mazda MX5, or a DisaVascular coronary stent, or even a pair of Salomon hiking boots – I am fully aware that human beings made this. That someone had vision, and genius and could bear the pain of getting it to market, of defying the odds of failure, of dreaming big, of pushing their limits, that it is here, that it exists, and that – should I want it – I can own it.

You can’t say the same about a sporting victory. No matter how brilliant, I can’t buy it. But I can buy a phone, I can buy a camera. I can support my heroes materially, and directly.

I take the competition of business no less seriously than does the greatest sporting fan. I celebrate the victories, I sob through the defeats, I damn my enemies, I declaim the cheats.

And I love the game.

If you’re a politician who has traded favors with the über-rich in exchange for campaign cash, you’re relieved.

If you’re a government official who has allowed ideology or bribes rather than dedication to public service to shape your decision-making, you’re home free.

That’s because there will be fewer journalists nosing around on your turf.

Gannett Co. is eliminating 1,000 jobs across its newspaper operations, including 600 layoffs. That includes 84 dailies such as The Arizona Republic and the Detroit Free Press as well as nearly 900 non-daily publications but not USA Today, reports the Chicago Tribune. That means fewer journalists available to defend the public’s interest.

What’s particularly cold about this news is Wall Street’s reaction. Gannett’s stock price had fallen about 60 percent from a year ago. When the news hit the Street, Gannett’s stock shot up. According to a MarketWatch story by Jon Friedman, a longtime industry observer:

Gannett’s stock-market jump is a commentary on how Wall Street thinks. It’s an exacting boss. There is a saying that the stock market has no memory. Professional investors care about the future — they are the ultimate frontrunners and their motto may well be: what have you done for me lately?

Gannett has historically been regarded as a prudent, well-run company. But Wall Street on Thursday isn’t rewarding the company for once having the optimism and long-range strategy of launching USA Today in 1982. Nor is the Street hailing Gannett for its years of expertise and strong management.

Instead, Wall Street is thanking Gannett for cutting costs, big time. [emphasis added]

The personnel cuts (which go beyond the newsroom) remain incomprehensible. As argued repeatedly at S&R, an industry that devalues its product by tossing overboard the people that principally create that product is foolishly reducing its ability to compete effectively with other media distributing information — including news that people want and need to lead informed, productive, satisfying lives.

The true owners of newspaper companies such as Gannett are large institutional investors concerned about obtaining the highest rate of return on an investment in the shortest time. Investors seek to maintain a newspaper industry profit margin now hovering in the mid- to high teens. But revenues are declining, mostly because of decreased print ad revenues (and a sour economy). Do the math: 16 percent X declining revenue = declining return. Astute financial analysts could probably speak to this more effectively than I. But Wall Street’s needs continue to dominate newspaper industry decision-making.

The industry sold its soul to Wall Street decades ago as a means to finance consolidation of formerly family-owned papers (with profit margins of 20 and 30 percent or higher) into conglomerates. Efficiencies of scale led to higher profits. Wall Street reaped high rewards from bankrolling a huge cash cow.

But the newspaper industry’s timid, inept leadership failed to timely recognize the competitive force of the Internet. Now the industry claims the Internet is its revenue generator of the future, pointing to ad sales figures showing double-digit growth in online advertising. But the gross of online revenue remains a pittance compared with the much larger (though declining) print ad revenue. Thus, to keep Wall Street happy, the news biz falls back on its favorite trick: Slash expenses to maintain the all-important and increasingly illusory profit margin.

The Street is thus appeased. The public is the loser. Journalists hold government (and corporations can be considered a government these days) accountable for its actions. With fewer journalists on watch, more actions of government and corporations go without public inspection.

The newspaper industry needs a new business model if the public is to be better served by journalists — as it once was, long ago.

More readings on the newspaper business:

• NYT’s 1Q profit bombs: Now what?
• Say what? A new business model for news should begin with … profit?
• Booting the boys off the bus: Coverage costly, newspapers whine.
• ‘Penny’ press redux: a new business model for journalism?
• Journalism then; journalism now: comprehending the difference.

The stakes in this election, pundits say, are the highest ever. (I heard that when Richard Nixon first ran for president.) So what does the Associated Press do to reliably keep us informed of the ins and outs of the really important stuff in presidential politics?

It creates a division of “Entertainment Content,” hires a director and up to 21 positions to push more celebrity news through video, audio, photo and text formats. Even celebrity writers such as Nikki Fine of Deadline Hollywood Daily find that disquieting. “At a time when major media organizations are cutting back on the most vital news coverage,” wrote Ms. Fine, “how discomforting to know that some are increasing their celebrity reporting instead.”

There’s two reasons for this: Money. (You expected a second reason? Okay: more money.) From an internal Q&A (obtained by Ms. Fine) with the AP’s new director of entertainment content, Daniel Becker (based in Los Angeles, of course):

There is overwhelming demand from customers and members for coverage of celebrity, movies and music. According to PQ Media, the market for outsourced entertainment news content is set to rise by 77% by 2011 to $960 million. So, increasing our entertainment coverage provides an opportunity to give them more of the content they want and to increase revenue at the same time. [emphasis added]

In that same memo, Mr. Becker promises that “[t]he entertainment vertical is not about gossip, unnamed sources and innuendo or about ‘peephole’ journalism with AP photographers becoming paparazzi.” (That’s apparently not the attitude of Frank Baker, the Los Angeles assistant bureau chief, who said in a January memo to staffers, “Now and for the foreseeable future, virtually everything involving Britney is a big deal.” Ms. Spears had just been released from a hospital.)

So, perhaps, the AP has some ’splaining to do. But this decision to bulk up celebrity snoopiness instead of political coverage, as well as the raucous flap over the AP’s attempt to impose “license” fees on bloggers to protect its content, misses a far more significant issue: More and more, the AP, like all “journalistic” media, reflects the wants of its members and consumers far more than editors’ timely and sober consideration of their needs.

Technology, revenue desires, and the need for speed have driven the AP to decisions unthinkable perhaps just a decade ago in creating what it calls “AP 2.0.” (How original, eh?) And it’s not entirely the AP’s fault as a wholesaler of news and other information. At the retail level, we — that’s you and me, folks — are demanding little more than the fast-food equivalent of news.

The AP has made several structural changes in how it operates designed to focus on speed: It has instituted “1-2-3-filing” and regional consolidation of editing functions to increase the speed at which members receive AP’s touted “premium” content. But speed does not always equal accuracy and thoroughness — or even newsworthiness. (“Consolidation” is a word journalists these days read as “layoffs.” AP promises none. We’ll see.)

This moves are designed to “rev up our journalism,” says Kathleen Carroll, the AP’s executive editor. That would be believable if at AP’s April 14 annual meeting William Dean Singleton (see earlier post) did not ascend to chairman of the AP’s board of directors, and Rupert Murdoch of News Corp. and Sam Zell of the Tribune Co. were not elected to sit with him. These folks are in the business of maximizing shareholder income by slashing expenses. They will bring these well-documented financial sensibilities to AP’s governance.

And these guys smell money in Apple’s iPhone. AP has created a “Mobile News Network.” From an April 14 press release:

AP is working with mobile phone manufacturers and carriers to develop the best user interface for this comprehensive collection of news stories, photos and video from the news industry. The network will be optimized for the richest multimedia experience the new wireless devices will allow.

I breathlessly await details on the AP’s interpretation of the words working with, best, comprehensive, news, optimized, experience, and richest.

AP considers itself a “Digital Cooperative.” Bob Benz and Mike Phillips, writing for the Online Journalism Review, signaled this “new” AP in 2005 and suggested ideas for maximizing its potential:

AP started as a cooperative. Today, it is a cooperative in name only. It’s time to take a lesson from music swappers and invent the new AP – a digital cooperative, a Napsterized news service.

But, the two suggest, AP has dropped the ball on their idea:

If AP had its collective head firmly inside the 21st Century, it already would be moving at least parts of its services in the Napster direction. But AP is like any business confronted with a disruptive technology. Its first inclination is self-preservation, not cannibalization. [emphasis added]

At AP’s 2008 annual meeting, President and CEO Tom Curley couched the AP’s strategic changes with this message to end users — “get local content from brands they trust” — and pointed to what AP will increasingly define as “premium” news:

As AP steps up efforts for more and faster breaking news coverage, it also is diving deeper into key areas to provide members and customers with premium content that goes beyond what AP provides in its core report. The initial vertical or subject coverage will provide rich offerings – from in-depth beat reporting and analysis to video and archive packages – in three high demand areas: sports, entertainment and financial news. [emphasis added]

That kind of content is not particularly local. But that’s what news members of this non-profit cooperative want AP to provide. Oh, don’t be so shocked. Glued to the tube for the U.S. Open? Tiger Woods on a broken leg? Wondering how your stocks are doing as the price of oil bubbles ever upward? Still titillated by news of both entertainment and political celebrities, et. al?

Collectively, this is what end users — that’s you and me, folks — of “news” and “information” have signaled they want. AP is reacting as a principal distributor of such “premium” content. With Mr. Singleton, Mr. Murdoch, and Mr. Zell at the helm, why be surprised that the AP would seek to capitalize on our predilections? And why be surprised the AP would act to protect its content to maximize its revenue? (The AP signaled its intent to do this, but buried it in the last graf of its 2008 annual report.)

In a nation collectively riveted to reality (or truTV’s “actuality”) television programs, “American Idol” and its imitators, and the liberal vs. conservative “NewsLite®” programming of CNN and Fox News, the information business has responded, and the AP is part of that business. The information biz, once known as the journalism biz, is easily slurping off the cream that we collectively lust for instead of giving us our daily ration of healthier milk. Hence the AP enlarges its entertainment coverage rather than seriously bolster political coverage of this Most Important Election Ever.

That’s sad. The AP at its finest is one of the best newsgathering operations on the planet, partly because of the financial diminution of other contenders. But its own financial stresses — and our collective indication of what we wish news organizations to provide — has eroded the AP’s brilliance bred through a century and a half. “News you can use — or at least be amused by” — is the new focus of the info industry. That includes the AP. And we just let it happen because we have not collectively demanded a better product.

When a president of the future decides to sell us a war with information either inexpertly produced or deceitfully presented, don’t wonder why the “press” doesn’t ask more forceful, probing, analytical questions. It’s been too busy covering sports, entertainment and personal finance tips and hastening to get them to your iPhone 160 characters at a time.

In his forward to Pete Dexter’s “Paper Trails,” Pete Hamill wrote:

Journalism, as all journalists know, is an imperfect craft that can sometimes become art. The ambition is always the same: to make marks on the walls of the cave that will help other members of the tribe understand what lies within. The journalist cannot say dragons are deep within if they are not. But he cannot describe a place that is benign and tranquil if he has not gone deep enough to see and smell and hear the dragon. The life of the tribe itself can depend on him.

Over time, the folks who deliver infotainment news by iPhone will increasingly be unable to detect that dragon. Those skills — that art — will wither. And part of the reason is we collectively ignore that such dragons exist, and we don’t demand that the news business find them and tell us about them — even if we’d rather they didn’t.

When we do, an industry with 100,000 employees will annually collect about $11 billion in revenue from our survivors, who presumably love us and wish to put us to rest with appropriate pomp and circumstance. Requiescat in pace, although survivors’ wallets might not.

Since 2002, after authorities found the remains of 339 people scattered about the grounds of a Georgia crematorium, the funeral industry has been visited by a wave of regulatory activity in many states. Not surprisingly, the funeral industry, a monopoly in many ways, wishes to influence that regulatory activity. It has also sought to influence drafting and revision of federal regulations, most notably the Federal Trade Commission’s “Funeral Rule.”

According to a richly detailed and footnoted report by Scott Jordan of the National Institute on Money in State Politics, from 1999 to 2006 the industry has coughed up $6 million in political contributions spread over political parties and state-level candidates in 46 states, positioning itself “to have a hand in shaping legislation and regulation” [emphasis added]. Millions more have gone to federal candidates.

This is what lobbyists principally do — act to influence legislation and regulation. And they’re really good at it. Therefore it’s important to take notice when presidential candidates spout rhetoric promising to “curb this industry” and “control that industry.” How will they do that?

A principal function of government is to necessarily regulate behavior of the governed. Some would argue about the definition of “necessarily,” but for people to live relatively peacefully in communities, states and nations, some agreement must be reached regarding individual and communal behaviors. But if a behavior is viewed as overly or improperly restricted, lobbying for behavioral change results. If one entity’s behavior unduly affects another, lobbying again results. Often, those doing the lobbying are referred to as “special interests.”

In America, government regulates a boatload of stuff. What we eat. The drugs we use (and abuse). How the barber and the butcher must be trained. How much of our earnings we may keep. The conditions of our workplaces. What tax we must pay to maintain the common good. The environmental quality of our air, water and land. The conduct of markets. Medical care. How some products and services are produced. Certain kinds of information. What the military may or may not do. How we collectively and individually protect ourselves and our property. How we marry. How our children are schooled and for how long. And what happens when we die.

Ah. Back to the funeral industry.

For industries, consistency of regulation, and, perhaps, minimizing it, is a desirable goal. Reports Mr. Jordan: “The interests of the funeral industry are not completely monolithic. They fight some oversight, but often support other regulations that may hinder competition.” Mr. Jordan details the uneven oversight of funeral industry regulation from state to state regarding apprenticeships and mortuary science diplomas, trust accounts for prepayment of funeral services, funeral merchandise, package sales vs. itemized billings, and monopolistic behavior. (Did you know that 10 states have “virtual casket monopolies” that allow markups of 300 to 400 percent?)

So the funeral industry set out to seek influence. Here’s the tale of its $6 million:

• State funeral director associations were the leading contributors,
accounting for $3.3 million, or more than half of the industry’s $6
million in contributions.
• The industry placed its bets wisely, with current officeholders receiving 82 percent of the $4.5 million given to candidates and incumbents not up for re-election.
• Party committees in 34 states received $1.5 million, or 25 percent of the industry’s contributions. The industry favored Republican Party.

Like any industry, the funeral industry seeks to influence regulation to further its ability to maximize profit. Its current problem is the patchwork of state regulations affecting the industry, hence its significant contributions at the state level. But gosh, wouldn’t it be easier all around if the funeral industry only had to deal with federal regulations — a single, known, consistent set of rules — rather than 50 different sets of state regs? That’s the wet dream of industries.

That’s what industries claim when faced with conflicting and contradictory regulations from state to state. It inhibits the ability to plan, industries say. It costs more to operate in one state than other. Jobs are at risk, too, they say. Give us one set of rules, please.

When the state of Maine passed a law in 2003 “requiring those who sell tobacco products directly to consumers to use only those delivery services that verify the age of the recipient,” thus superseding a federal statute, the trucking industry took Maine to the Supreme Court. It argued Maine’s law opened “the door to the very patchwork of conflicting state regulations that Congress meant to pre-empt when it deregulated motor transportation.” Industries hate “patchworks of conflicting state regulations.” That creates roadblocks to maximizing profit.

Consider what the auto industry confronts regarding emissions. The federal Clean Air Act gave California “the unique authority to set its own emissions standards and allows other states to adopt California’s rules instead of the federal rules.” So far, more than a dozen states have done so. The auto industry is not happy with that.

Methinks, though, that a principal reason industries seek a single consistent federal regulation is simple: the cost-effectiveness of lobbying. If the feds control the regulations, then the lobbyists only have to deal with Washington, D.C., legislators and regulators rather than those scattered through 50 different state capitals.

See, that’s the thing. Lobbying is most effective when it’s a person-to-person enterprise. The lobbyist takes the politician or regulator to lunch, contributes to his or her favorite charities, attends his or her fundraisers — and makes lots and lots of donations. It’s squeeze and please. One-stop shopping makes that easier.

Why spin the federal regulators? Easy. Congress passes laws in broad strokes that enable regulation. It leaves the details of actually writing the regs to “experts” in federal agencies and departments. If you cover a legislative body as a journalist long enough, as I did, you discover that much legislation is actually drafted by lobbyists. General Electric is the acknowledged master:

[I]n a two-year campaign, fueled as much by brains as political brawn, GE has shaped the legislation that would replace the old export-promotion law in ways that would allow it to save as much, if not more, in taxes, according to both GE lobbyists and congressional aides. In pursuing its financial interest, the company may also have turned the U.S. corporate tax code away from domestic manufacturing and toward expansion of operations abroad.

Industries routinely seek to write tax benefits into legislation. Remember the jobs act that created no jobs? The American Jobs Creation Act of 2004 allowed numerous multinationals a one-time chance to repatriate profits abroad at a tax rate of 5 percent instead of 35 percent. Now, that’s lobbying for you.

How can a president control the wholesale drafting of legislation by lobbyists that time and again becomes the law of the land? I don’t have an answer for that. Perhaps the press that reports on our current crop of contenders could actually ask that question.

But a president does have some control over who writes the regulations mandated by Congress. It’s called The U.S. Constitution, Article II, section 2, clause 2, which says:

The president shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States …[emphasis added]

The president appoints a few thousand people to serve in the federal government. Those hire others. Sometimes those appointments are rather iffy. As I’ve written previously, “Congress makes laws. But presidents appoint the regulators who actually write the policies that implement those laws. While Democratic presidents have had controversies with regulators being too close to the regulated, President Bush’s appointments have been particularly noteworthy as pals of industry.” (Other times, regulators act honorably. It’s a mixed bag.)

President Bush is a dwindling irritant. The next president will likely sweep out hundreds of Bush political appointees in favor of those more palatable to the new president’s philosophy (which, in turn, may be shaped by the influence of those “special interests” who contributed to his or her campaign money, influence or service.)

But whom will the next president appoint to act as writers of regulations? Again, perhaps the press that reports on the campaigns could actually ask that question. So far, only Washington Post columnist David Broder has prominently done so. In wondering why his colleagues spent so much ink and air on the Rev. Jeremiah Wright’s preaching, given that the reverend won’t be a member of an Obama administration, Mr. Broder says:

I’d like to know what kind of people Obama would bring into his White House and where he would turn for a Cabinet, because there is so much uncertainty about his actual policies at home and abroad.

The presidency is routinely referred as the most powerful position in the world. But in the context of legislation and regulation, that ain’t necessarily so. He or she cannot effectively control the former, but he or she may significantly affect the latter through his or her presidential appointments.

Instead of “he said, she said,” horse-race, trivial coverage of the presidential campaign, more light ought to be focused on the qualifications a candidate would demand of potential appointees. The press isn’t doing it.

Meanwhile, back in the $10,000 copper or bronze casket:

The National Funeral Directors Association, “the leading funeral service association, serving 19,500 individual members who represent more than 10,000 funeral homes in the United States and other countries,” continues to lobby the Federal Trade Commission to reopen its regulatory review of the “Funeral Rule” and its decision to retain the rule as it stands.

Says the association’s CEO, Christine Pepper:

After almost a decade of review, during which time NFDA continually offered written comments hoping to tighten and improve the rule to better protect both funeral service professionals and consumers, it is disheartening to see the FTC take this position. While the review process may be over, NFDA will continue to advocate through all available channels of government for a Funeral Rule that provides those meaningful protections. [emphasis added]

Ah, the language of lobbying. Mention those consumers. Discuss meaningful protections. Refer to improvements. Meanwhile, under the FTC’s Funeral Rule, “law enforcement sweeps of 174 funeral homes in nine states found significant violations of the FTC’s Funeral Rule at 26 funeral homes and minor compliance deficiencies at 66 others.” The violations included failure to provide itemized price lists and casket price lists.

In 2006, FTC regulators obtained a consent settlement when they “contended that Service Corporation International’s (SCI) proposed acquisition of Alderwoods Group Inc. would lessen competition in 47 markets for funeral or cemetery services, leaving consumers with fewer choices and the prospect of higher prices or reduced levels of service. [emphasis added]”

Since 1990, the funeral industry has made more than $7 million in campaign contributions to federal candidates or PACs, leaning toward Republicans.
According to Mr. Jordan, Service Corporation International, “which bills itself as ‘North America’s largest single provider of funeral, cremation and cemetery services,’ contributed more than $319,800 in 19 states.”

So many industries, such as the funeral industry, through their lobbyists and professional associations seek to influence legislation and regulation. Lip service is indeed given by industries to “protecting the consumer” and other politically correct niceties, but don’t be fooled: protection for industry is the holy grail sought.

If your favorite presidential candidate stands up at a rally, looks you straight in the eye, and boldly claims, “I will stand up to the special interests,” you look him or her right back and just as boldly ask: “How?”

It could not be, and should not be, a sound-bite answer.

xpost: Scholars & Rogues

But what should a new business model for an industry whose principal product is journalism look like?

It would have to recognize several new — and old — realities.

• Any new business model must generate profit.

There’s no way around this. Journalism is best sustained within a for-profit frame. A company that engages in newspaper journalism as a product is not supported by government (unlike public television) nor should it be. The same holds for commercial broadcast journalism as well. To provide news, the company must make a profit to attract investors and secure the resources to collect, report and transmit that news. A non-profit model cannot immediately match the breadth and depth of news reporting that a healthy democracy of more than 300 million citizens requires.

The industry’s nosedive to lower revenues and reduced circulation has been predicated on an ill-fated imperative: maintain the current level of profit (about 16 percent) to retain and placate short-term institutional investors. That’s unsustainable, but news corporations refuse to confront that reality.

Still, arguments about public service as a moral imperative to maintain that healthy democracy, etc., while sounding grand, must take a back seat to the fiscal imperative. A news company must earn adequate profit to be able to tell better stories.

The industry must revisit its relationships with its investors, its consumers and its advertisers to determine what level of profit is appropriate, necessary and feasible for investors as the industry seeks to provide better stories to consumers and better service to advertisers. But there must be profit to enable large-scale collection and dissemination of meaningful news stories.

For long-term gain, there will be short-term pain. It takes money, and lots of it, to tell better stories in quantity.

• Find a technological panacea that will recapture some revenue from newspaper advertising’s Big Three: classified “help wanted” and “articles for sale” ads, and classified and display ads for real estate and motor vehicles.

These are the significant revenue sources the news companies have lost to non-news, online enterprises. Those ads have all but vanished from print newspaper pages. Online ad revenue for news companies is increasing, but it remains a small share of overall revenue. Still, news companies continue to delude themselves that online ad revenue is the immediate future. But that revenue is not increasing fast enough to rescue the current, faltering business model.

Advertising’s Big Three have migrated in bulk online. If the journalism business seeks to revitalize its content, it must find a way to recapture some of that principal advertising revenue it has lost. Without new and recaptured revenue streams, the journalism industry will not be able to produce better stories for people to read to produce the increase in eyeballs — and the proof of greater return on investment — that advertisers demand. (Can you say “vicious cycle”?)

• The business model must produce a greater quantity of a higher quality of journalism.

Currently too many people (young and old alike) who would like to work in journalism think newspapers are dying. They think they’d have to be nuts to go into a business that believes 60-hour weeks without overtime should be a normal routine for an entry-level salary of about $27,000.

If the business of journalism is to survive, a better product is necessary. That means better compensation for journalists and support staff — and hiring more of them. It means more money spent on continual training. It means news companies must work to achieve better relationships with and provide greater financial and instructive support to journalism education. The industry needs to improve the skills and breadth of general knowledge of journalists.

The industry needs a better product than it now produces. If the industry seeks to survive on the viability of journalism as content, it must invest to improve its product and its value for consumers, advertisers and investors alike.

Simply put, the new model should recognize that better compensation and improved working environments could produce a more skilled and more motivated work force. It takes seasoned, well-trained, properly compensated journalists to tell better stories. And the industry needs an improved product — better stories — to justify claims on old and new revenue streams.

• The model must confront the related issues of “free” and “social networking.”

The younger readers the industry seeks to attract today — and is failing to do so — expects the content, the news product, to be free.

If the industry intends to charge what this important demographic now gets free, it must convince that part of its audience that the content has new, added value and can be delivered in a timely manner and through a means of the individual reader’s choosing.

That’s important. Social networking through the Facebooks and YouTubes of this world have woven a culture of pass-along and free content into the very demographic the news industry says it wants to claim as customers. This demographic, a continually changing 18- to 30-years-old constituency, has adopted information-seeking and -sharing habits that the journalism business has blithely ignored for quite some time. Simply having an online presence via a Web site is insufficient for this demographic.

The means of delivery of content has become almost as important to this younger and technologically obsessive demographic as the content itself. A new business model has to think beyond mere repurposing (medium-dependent revision) of content. It must provide content of sufficient value to this segment of the audience to encourage its members to accept paying for it and to want to demonstrably circulate more of it (along with attached advertising) to other readers or viewers.

All demographic segments of the audience, including this advertiser-prized one, want better stories and brain-dead easy ways to acquire and share them. That also means newspapers must confront blogging — whether to, how to, why, and definition of measures indicating effectiveness. Blogs are a principal means that the industry’s desired demographic obtains and shares news. Newspapers have yet to fully develop adept, adaptable and financially and journalistically productive approaches to their own blogging capacity.

• Newspaper companies must decide what to do with their print product.

Some newspapers have begun to abandon the print product — but by abandoning readers. They have withdrawn from widespread regional (and rural) circulation to core areas around large municipal centers. This, too, is a short-sighted means to cut expenses. An industry that abandons customers is extraordinarily misled by its managers.

But how does this relate to keeping or killing dead-tree newspapers? Responsible corporate leaders will seek to retain readers — the customers — and acquire new ones. If a decision is made to abandon the print paper for an online version only, then newspapers should lobby for a broadband version of the Rural Electrification Act of 1936. The means to reach more readers must accompany a decision to go-it-online. Broadband must have broad, affordable reach to encompass the whole of a society. News companies should lobby Congress for government-assisted and -encouraged broadband access throughout rural America.

It is unthinkable for an industry that has its origins in defending its readers as their adversary to government to abandon those readers just because their location is geographically problematic. The public service mission of journalism ought to rule here. An industry engaged in journalism can’t be allowed to leave people behind.

• If the new business model decrees abandoning the print newspaper, its online or multimedia replacement must retain the journalistic responsibility of being the “paper of record.”

The maxim that journalism is the first, rough draft of history grew from newspapers’ legal and cultural roles as “papers of record.”

Someone has to keep track of society’s daily significant occurrences. Someone has to keep track of government meetings, deliberations and actions. Someone has to maintain a daily police log, a record of court proceedings, real-estate filings and such. Someone has to publish required “legal notices.” Few bloggers will keep track of the endless budget meetings and other factors influencing local property tax increases.

That’s what journalism does. A paper of record manned by experienced journalists does these important tasks. A new business model must allow that role of “paper of record” to remain firmly in journalism’s hands.

• Under a new business model, journalism must reconnect with what it has lost through more than a decade of slashing newsroom jobs. It must revitalize local reporting.

Read your local paper (or view its Web site). What’s not there that was a decade ago, two decades ago? Do you miss it? As newspapers have slashed reporting and support staffs, the ability to cover local news as competently and completely as in the past has diminished significantly.

Only the easier stories remain — the accidents, the fires, the crimes, the interesting government meetings versus the boring but complex, important ones. And sports. Has sports become the largest section of your local paper? Twenty years ago, it probably wasn’t.

News companies must find a way to reconnect with local issues, local concerns, local interests. They ought to do this in self-interest: Well-done local news breeds local advertising dollars.

Journalism is controlled by corporations whose principal motivation today is certainly not journalism as a public service but some truncated form of journalism that maximizes short-term profit.

It’s important to differentiate between journalism and the news business. Journalism represents an activity inherent in a functioning democracy that acts as a watchdog, that defends readers (and viewers and listeners), and that holds governments and corporations accountable for their actions. (Journalism even ought to entertain!) That’s the trade-off for protection against government interference provided by the First Amendment.

For journalism to retain its important democratic role, it needs a home. Ironically, that home must be a better-functioning and profitable news industry.

• • •

Understanding how the media industry works and why it works that way is a principal reason Scholars and Rogues was founded. Much of our dialogue here centers on the role of the media in social, economic, political and cultural transformation.

S&R invites commenters into this critical conversation about how the media industry ought to be shaped, why that must happen effectively and what consequences may occur if it does not. Please let us know what you think.

A brief description of job conditions from a lawsuit against the China Daily News might make those complainers think twice:

Reporters testified in the case that they were forced to work six days a week at 12-hour shifts that could extend to 17 hours at times with no breaks for meals. Supervisors altered time cards to make it appear that no overtime was worked. Reporters were also given quotas of stories to come up with, according to the lawsuit.

More than 200 reporters, ad salespeople, delivery drivers, secretaries, and production workers ultimately joined the class-action lawsuit that was first filed in 2004. The group contended they were owed overtime pay dating back to 2000.

According to a story at Editor & Publisher, “[t]he Chinese Daily News has been slapped with a $5.2 million fine by a federal court in Los Angeles for operating a journalistic sweatshop.” [emphasis added]

According to E&P, one former Daily News worker told The New York Times:

Reporters were required to produce five stories a day, Ms. Wang said, which meant they had to race between news conferences and interviews for hours without a break. Production workers and packers did the same indoors, spending hours before presses and stackers. Quotas for advertising salespeople were unreasonably high, she said, and drivers were forced to navigate rush-hour traffic with long lists of delivery addresses strewn across the sprawling city.

That’s kind of how I remember my 20 years in the newsroom. Maybe I should sue my old paper.

The Invasion and Occupation of Iraq Surpasses the American Civil War in Duration: The United States’ involvement in World War I lasted only 19 months and World War II lasted 44 months for the United States, even though the war itself was nearly six years long. The occupation of Iraq (aka the Iraq War) outlasted World War II in November of 2006, making the duration of U.S. involvement in Iraq the third longest foreign occupation in U.S. history. The American Civil War lasted 48 months, and the Iraq occupation surpassed that duration on March 20, 2007. This makes the Iraq occupation the third longest running period of continuous conflict in U.S. history, behind only the Vietnam War and its sister conflict in post-Taliban Afghanistan.

The United States invaded Iraq on March 18, 2003. By the end of 2007, the United States will have been involved in Iraq for 4 years, 9 months, and 14 days. (Brian Angliss)

Al Gore Takes the Heck Over: The big deal here isn’t the movie, the Oscar, or even the Nobel. No, the real reason Al is one of the citizens of the year is because he, more than anyone, has pushed concern for the environment close to, and perhaps over, the tipping point from “librul treehugger” issue to common sense bipartisan issue. You may have noticed recently that a lot more people seem to have accepted that Green is Good. Gore doesn’t deserve all the credit, of course, but he merits a lot.

The question now is whether he’s done more good as non-President than he could have had he not lost the 2000 election 5-4.

The Intergovernmental Panel on Climate Change Releases its Fourth Assessment Report (AR4): This year saw the release of the United Nations’ Fourth Assessment Report (AR4) of the state of the global climate since the inception of the Intergovernmental Panel on Climate Change (IPCC) in 1988. Composed of the governments who make up the World Meteorological Organization (WMO) and the United Nations Environmental Programme (UNEP) and chartered “to provide the decision-makers and others interested in climate change with an objective source of information about climate change,” the IPCC has independently assessed the best available climate science for the fourth time and concluded that there is over a 90% chance that human-created greenhouse gas emissions are driving up global mean temperature.

Starting in February, the IPCC released three massive reports, Working Group I’s “The Physical Science Basis”, Working Group II’s “Impacts, Adaptation and Vulnerability”, and Working Group III’s “Mitigation of Climate Change” throughout the year. Two weeks before the start of the United Nations Climate Change Conference in Bali, the IPCC released the AR4 Synthesis Report, the final AR4 document that distills all the detailed scientific an socio-economic conclusions and analyses to create a single document that is supposed to guide the entire world’s policy planning from now until the IPCC next addresses global heating.

The net result of the four reports was a softening of the U.S. position that global heating wasn’t occurring, although the Bush Administration continues to pursue a policy of voluntary reductions in CO₂ emissions in opposition to the centralized government regulations favored by most of the rest of the U.N. In addition, the IPCC reports triggered a sudden explosion of interest by mainstream and alternative media in the United States, the world’s largest CO₂ producer. As a result, the bulk of the U.S. Presidential candidates have detailed their positions on what the U.S. should do to combat global heating, many are on record supporting or co-sponsoring anti-global heating legislation of some form, and energy and global heating policies have been taken up by the U.S. federal government repeatedly, albeit without significant action. And in lieu of federal action on global heating, multiple states have formulated their own approaches to mitigating the effects of global heating.

The scientists and policymakers involved in crafting the various IPCC reports had their work validated with the award of the Nobel Peace Prize in December. (Brian Angliss)

A Bridge Over In Troubled Waters: Thank goodness America is committed to rebuilding infrastructure in Iraq. Tragedy, sure, but your politicians are on it.

The First Nuclear Power Plant Construction Permit Since 1978 is Requested: In the late 1970s, public outcry against nuclear power, plant safety concerns, and high construction costs combined to make new nuclear power plants cost ineffective when compared to other sources of electricity, especially coal and natural gas. These concerns were proven in the public mind by the accident at Three Mile Island and then later reinforced by the Chernobyl accident. As a result, there were no new requests to the U.S. Department of Energy for new nuclear power plants since 1978 until NRG Energy of Princeton, New Jersey requested one on September 25, 2007.

Significant changes in two factors in opposition to new nuclear plant construction since the late 1970s have enabled NRG Energy to take the risk of adding two new reactors at an existing Texas plant. The first is a president friendly to nuclear power and a nuclear-friendly Republican Congress for President Bush’s first term. This resulted in the Energy Policy Act of 2005, which had significant government incentives designed to spur the development and construction of new nuclear power plants, mitigating much of the economic risk of constructing new nuclear reactors. The second is a rising number of scientists and environmentalists who have concluded that nuclear power is the lesser of evils when it comes to environmental damage vs. carbon dioxide-intensive fossil fuels like natural gas and coal. A third factor also plays a minor role in the timing of the new permit request – it’s been nearly 30 years since the last request and the public has lost some of its fear (for good or ill) of nuclear power and its risks. (Brian Angliss)

Tragedy at Virginia Tech: Horrible, unspeakable – there just aren’t words to describe it. Worst of all, I remain convinced that the toll could have been less than it was. Hopefully the tragedy got people on campuses across the country to thinking more concretely about what they can do if it happens where they work.

The iPhone: Don’t buy one until they make it available on all carrier platforms. That said, this is an innovation that’s eventually going to live up to and exceed all the hype.

The Minot to Barksdale Nuclear Express: At the end of August, the security blunder of this young century occurred when six nuclear warheads were flown from one US Air Force base in Minot, North Dakota to another in Barksdale, Louisiana. But Philip Coyle, a think tanker and former assistant secretary of defense, said, “This wasn’t just a mistake. I’ve counted, and at least 20 things had to have gone wrong for this to have occurred.”

Since Barksdale is an embarkation point for Middle East military operations, speculation inevitably arose that the nukes were intended for use in Iran. But a base commander lacks the authority to order the transport of nuclear weapons. Was the order issued by an alternate Cheney chain of command?

It’s been stated that the US military would never release data this sensitive to the public without authority from the White House. According to this line of thinking, the intent wasn’t to bomb, but, instead, to put the fear of God-Allah in Iran.

The disturbing nature of the story has only been compounded by a related Cheney chain of events. Immediately preceding and following the event, six personnel at the two bases died in apparent accidents or by suicide.

Especially unsettling was the unlikely death of a member of the Special Forces in the wild. (Dave Lindorff has been all over this.) Besides the ultimate destination of the nukes, one can’t help but wonder if the dead were whistleblowers.

Even though the US has become blanketed in secrecy, it’s still not PC to compare Bush & Co. to Nazi Germany. How about, with its all-pervasive Stasi, East Germany? (Russ Wellen)

The Jena 6: In July the NAACP buried “the N-word.” There was never racism in America again.

“Don’t tase me, bro!” High profile politician gives a public address. College students fill the building. Cast of Reno 911 hired to manage security. Hilarity ensues! It’s the feel-good hit of the summer! Starring Toby Maguire and John Kerry. (Dr. Sid Bonesparkle)

Sioux Sue for Sovereignty: In December, a Lakota (Sioux) delegation delivered a statement of “unilateral withdrawal” to the State Department. In other words, it plans to secede. Not all Lakota, just the delegation, which was led by Russell Means. He, of course, is famous for surviving the siege at Wounded Knee in 1973 and founding the American Indian Movement (AIM), as well as for his movie roles.

One can imagine the federal government’s response: “Go ahead, enjoy your little secession. Of course, we won’t be subsidizing your reservations anymore. Plus you have no chance whatsoever to change your mind about the $122 million in compensation the Supreme Court awarded you a couple of decades ago and which you refused.”

Means, however, also announced that his group planned to file liens on property in parts of South Dakota, Nebraska, North Dakota, Montana and Wyoming. “The Missouri River is ours, and so are the Black Hills,” he said.

But while Means taketh away with one hand, he giveth with the other. He invites one and all to live in the Lakota Nation, tax-free, as long as they renounce their U.S. citizenship. Don’t worry: It will issue drivers’ licenses and passports.

Once Americans get it through their heads that this isn’t a reprise of the Confederacy, many might find the idea of a nation free of taxes, as well as war, appealing. After all, like Ron Paul, Means is a libertarian, under which guise, he too has run for president.

Still, the first person with whom I shared the Lakotas’ plans for secession said, “Oh great, it’s bad enough we have to worry about the terrorists. Now, this too.”

Primal frontier fears resurface: Will the redskins return to their renegade roots and take revenge — not to mention scalps? Not likely.

But Bolivia’s president Evo Morales, as well as Venezuela are following events closely. Those Americans bent out of shape about the “NAFTA Superhighway” from Mexico to Canada may as well start worrying now about One Indigenous Continent for All. (Russ Wellen)

Arkansas Couple Welcomes Their 16th Child: “It’s a blessing from the Lord,” who apparently wants to bless the world with rampant overcrowding. It would be wrong to ask the Lord to bless these people with some counseling, wouldn’t it? (Dr. Sid Bonesparkle)

Scott McClellan on the Road to Damascus: “So I stood at the White house briefing room podium in front of the glare of the klieg lights for the better part of two weeks and publicly exonerated two of the senior-most aides in the White House: Karl Rove and Scooter Libby. There was one problem. It was not true. I had unknowingly passed along false information. And five of the highest ranking officials in the administration were involved in my doing so: Rove, Libby, the vice President, the President’s chief of staff, and the president himself.” Scotty, we’re looking forward to your book and we hope it helps put some richly deserving criminals where they belong. But there’s one little problem with your story. We knew you were lying. If you didn’t, you’re either a raging moron or a man of “tremendous faith.”

The Subprime Lending Crisis: For a few years now I’ve been watching the housing market and not fully understanding how you could have all that junk financing, spiraling housing prices, massive new construction and high used home inventory all at the same time. I mean, I’m no expert. But this year reality set in – in a big ugly way. And just when we thought we were going to be able to sell our house back in New York.

President Bush Commutes the Perjury Sentence for Scooter Libby: We learned in History of the World, Part 1 that it’s good to be da king. If you can’t be da king, we now know that next best thing is to be the guy who has evidence against da king.

Astronaut Lisa Nowak Allegedly Attacks Astronaut Colleen Shipman: Lisa, when your friends told you that you needed to “pamper” yourself, this isn’t what they meant. (Dr. Sid Bonesparkle)

Join us tomorrow for more of 2007 in review.

Credits: All items not attributed were written by Sam Smith.

What do you get if your principal stockholder bails out, claiming you failed to act to maintain the share price?

What do you get if you lay off hundreds of employees over the years to reduce expenses but fail to improve the product sufficiently to invigorate revenues?

What you do get? You get rich. Now that Chicago businessman Sam Zell has wheeled himself into ownership of the Tribune Co., current Chairman and Chief Executive Dennis J. FitzSimons is expected to leave at the end of year — with an estimated $40 million, according to corporate disclosure documents.

FitzSimons, a 25-year Tribune veteran who rose through Tribune broadcast management and sales, became CEO in 2003 three years after Tribune bought Times Mirror, owner of the Los Angeles Times. From The Times:

That eventually put him in direct conflict with the Los Angeles-based Chandler family, which had controlled Times Mirror for more than a century. By mid-2006, the Chandler heirs, who were Tribune’s largest shareholders, were openly disaffected with FitzSimons’ management. They contended that he had failed to exploit the promise of the Times Mirror acquisition, which had been predicated on the advertising and news-gathering synergies of owning newspapers and broadcasting in the same cities. The Chandlers contended that Tribune management had failed to respond to the challenges of declining newspaper circulation, broadcast audience share and advertising revenue afflicting both its major businesses.

FitzSimons had been instituting expense reductions across the company. But those actions created turmoil, especially at the newspapers. At The Times, two publishers and two editors resigned, the latter in opposition to staff and budget cuts ordered from Chicago headquarters. Similar turnover occurred at other newspapers in the chain.

In June 2006, the Chandler family accused management of not moving decisively enough. In an open letter, it complained that FitzSimons had “failed to generate a viable strategic response” to changes in the industry and had allowed “value to deteriorate.” Tribune’s stock price had fallen to about $30 from above $50 since FitzSimons took over, the letter claimed.

The family demanded that the Tribune board consider a breakup, a sale or a leveraged buyout of the company, which it contended would yield more than $35 a share. FitzSimons led a search for potential suitors lasting nearly a year. After a troubled auction, Zell emerged the winner with a $34-a-share bid to be financed by debt. The Chandlers sold all their Tribune shares in the first phase of the transaction in the summer.

So Mr. FitzSimons will receive, it appears, 40 really, really large for his business acumen, expertise and long service.

I suppose I should be shocked! appalled! outraged! etc. But it’s just another story of the American Dream becoming the American Scheme.

He replaces Robert Jelenic, acting CEO since June, who is battling cancer.

Mr. Hall’s compensation agreement (oh my gawd, wait’ll you see it) leaves me speechless considering the company’s financial condition. But first, we must eat our spinach and look at the finances of Journal Register. Then you get dessert. (Teaser: He gets a company-owned 2007 Chevy Envoy, which the company will sell him for $1 in November 2010, and up to $5,500 for lodging near the company’s headquarters.)

The Journal Register Co., according to its Web site, “owns 22 daily newspapers, with approximately 559,000 total daily circulation, including the New Haven Register, Connecticut’s second largest daily and Sunday newspaper. The Company also owns 346 non-daily publications, with total distribution of more than 6 million, as well as commercial printing and software development companies.”

It reports annual revenues in excess of $550 million, a small figure compared with larger media corporations but still a nice sum. But it appears to be insufficient for the company’s shareholders. Total revenues for the third quarter, according to a company press release, fell more than 7 percent from a year ago.

The company’s financial condition reflects the troubles of the newspaper industry.

In October 2006, Journal Register’s second-largest shareholder — Private Capital Management — bailed out. (PCM is the same management fund that forced “the former second-largest U.S. newspaper publisher, Knight Ridder Inc., to sell itself after failing to boost its lagging stock price.”

And the Journal Register’s stock price is tanking. From the AP story: “Shares of Journal Register rose by a penny to $2.01 on Tuesday. The stock has lost 90 percent of its value since closing at $19.33 on Dec. 31, 2004.” [emphasis added]

The company has sought to reduce expenses by cutting jobs and to raise money by selling assets.

For example, in September 2006, Journal Register said it would cut 82 jobs at newspapers in Michigan to save $3.2 million a year.

To raise money, Journal Register said in December 2006 it would sell seven papers in southeastern Massachusetts — including the Fall River and Taunton dailies — for $70 million to GateHouse Media (a Fortress company that actually makes money). In January, Journal Register said it would sell GateHouse three Rhode Island dailies for $7.6 million.

In November 2006, Journal Register joined a consortium of 176 newspapers to partner with Yahoo to share content, advertising and technology. But the company’s advertising revenues fell more than 9 percent in the third quarter from a year ago. That Yahoo move doesn’t seem to have paid off very well.

Internet to the rescue? Not yet. Although Web ad revenue rose nearly 25 percent in third quarter from a year ago, it represents only about 6 percent of all ad revenue.

Why is this company offering its CEO so much in compensation? Yes, the argument is you gotta pay high to get good talent. But Mr. Hall is existing talent: He has been part of a board of directors guiding the company’s current tumble. We’ll see a year from now what the company’s stock price does with him at the helm.

Here’s what Mr. Hall also gets for compensation:

• “Hall will get yet-to-be-determined cash bonuses this year and a performance-based bonus as high as $1.35 million in 2008. He also was granted 250,000 stock options and will receive another 250,000 next year.”
• “He also will be reimbursed for traveling to and from his home in Canada, capped at $6,000 a month or standard airfare rates. The company will also pay reasonable travel expenses for his spouse to attend business functions.”
• “Hall will get as much as $37,500 a year to defray tax differences between the U.S. and Canada. He also will be reimbursed up to $12,500 a year for tax planning and preparation.”
• “If Hall leaves the company, he may be hired as a consultant and paid $33,333 a month for the first year and $25,000 monthly for the second year in exchange for up to 15 hours of consulting work a month.”

Mr. Jelenic, the departing CEO, has been a director of the company since 2003. On his watch, the company’s stock price has fallen nearly 90 percent. Here’s what he gets as severance:

• “Jelenic … was given $4.76 million in severance. Vesting of his 192,500 restricted stock units was accelerated and outstanding vested stock options will remain exercisable until November 2010 or the options’ expiration, whichever is earlier.”
• “Journal Register will pay for Jelenic’s company car and country club membership until November 2010. The company also will sell the car to Jelenic for $1 after November 2010. Jelenic gets his company computer, printer, fax machine and similar items for $1 each.”
• “Jelenic keeps secretarial and information technology support until Dec. 31, 2009. He also received lifetime medical benefits.”

Mr. Hall, too, has been a long-time director of Journal Register. How does this pay package act as incentive for him to turn around the company’s stock price freefall? He gets his rising or falling.

The company’s mission statement says: “Our Mission is to be the leading provider of local news, sports and information in the markets we serve, both in print and online.”

It’s failing miserably. So it rewards a director of a faltering company with a massive compensation package.

As I’ve argued repeatedly, improving the product, i.e., better news stories, is the basis for shoring up revenues. Good journalism begets good business, argues Phil Meyer in his book “The Vanishing Newspaper: Saving Journalism In The Information Age.”

If you’re a fresh-out-of-college journalism major, how will you react to the company’s offer for an entry-level reporting position of, say, $26,000, a week’s vacation after a year, health bennies only after six months and nights and weekend duty?

When will newspaper companies learn to invest at the bottom rather than at the top?