Accuracy in Media

Consumers’ Research Magazine has published a James Glassman column entitled, “What You Can’t Learn From TV Financial News.” Glassman says that “?the best rule for daytime financial television is this: Don’t watch it. The messages it sends are all wrong, and they focus your attention in the wrong direction.”

That could be said for some of his columns. Back in September, 1998, Glassman’s Washington Post column described Enron as a company that would “win big.” Glassman, co-author of the book, “Dow 36,000,” referred to complications that make investing in utilities both very difficult and potentially very rewarding. He added, “Some companies will win big. The most aggressive player in this new arena is Enron Corp ? whose main business is supplying natural gas to companies that generate electricity.”

An August 16, 1998 Glassman column in the Post recommended that readers buy Enron. He said it was one of 40 stocks worth examining: “It’s an excellent list, with nine foreign companies. You wouldn’t go far wrong buying all 40 stocks ? ” A Glassman column on how Michael Milken helped financed Enron and other companies was headlined, “Thank you American Businessmen.” Glassman says financial journalists should help people find good companies. But he didn’t do a good job of that.

Glassman is also wrong about financial news on television. The cable channel CNBC recently aired an excellent series of reports, called “Treasure Islands,” about tax havens. Reporter Scott Cohn noted that Enron created more than 600 partnerships in the Caymans, a British colony, but employed no one there and built no facilities. But the tax havens themselves are not the reason that Enron failed.

Cohn visited the Caymans and reported that many companies find them attractive. He reported, “Companies and investors come here for secrecy ? a hallmark of Cayman law. The government and the legal system of this British colony are stable. But perhaps most important, the Caymans have no taxes. No wonder most major U.S. companies have some sort of presence here.” Some members of Congress want to get their hands on that revenue for their own pork barrel projects. Cohn interviewed Congressman Lloyd Doggett, who said, “There are billions and billions of dollars that we all have to make up for as ordinary taxpayers that are being lost to the Treasury, and it’s really unfortunate.” Doggett has sponsored legislation that would make offshore incorporation more difficult.

But reporter Cohn said, “Rather than penalize companies for moving offshore, some U.S. officials would prefer to amend U.S. tax laws, encouraging businesses to stay put.” Mark Weinberger, assistant Treasury secretary for tax policy, said, “We have a tax system? practically the only one in the civilized world ? that taxes all income no matter where it’s earned. Most foreign jurisdictions only tax business income within their borders.” So tax havens are attractive because of high corporate taxes here. They make companies more profitable and keep prices of products lower for consumers. Except for CNBC, that’s an aspect of the Enron story that has gotten very little coverage.

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