BROOKE GLADSTONE: As part of his economic team's shakeup this week, President Bush recruited three more corporate chieftains into his administration. The appointments of radio executive John Snow [actually railroad executive John Snow] as treasury secretary, former Goldman Sachs head Stephen Friedman as chief White House economic advisor, and ex-investment banker William Donaldson [Brooke mispoke his name as Roger Donaldson] as Security and Exchange Commission chairman are just more evidence of how business and politics increasingly intertwine. And yet this is a phenomenon that the press has been behind the curve in covering as OTM's John Solomon explains.
JOHN SOLOMON: With former businessman George W. Bush now at the top of the government's organizational chart, more and more it seems that the business of politics is business and the business of business is politics. News organizations are generally structured to cover the public and private sector separately. That may be why they were late to recognize how the two overlapped in the recent corporate scandals. Harvard Business School professor Quinn Mills is the author of the book Buy, Lie and Sell High.
QUINN MILLS: The business journalists didn't get the whole story. The Washington political journalists didn't see the whole story, and it feel between the cracks!
JOHN SOLOMON: For a reporter, getting the whole story would have required knowing the arcana of both Capitol Hill and Wall Street.
LAURA UNGER: Well, Washington and New York might as well be two completely different countries.
JOHN SOLOMON: Laura Unger was a commissioner of the Securities and Exchange Commission from 1997 through 2000 and served as acting chairman in 2001. She is now the on-air regulatory analyst for CNBC.
LAURA UNGER: If you have someone who has only grown up in either one environment or the other, it's very hard to have the dual perspective that you need to get the full and complete picture of both of those worlds.
JOHN SOLOMON: Wall Street Journal reporter Greg Ip covered the financial markets for four years before moving to the Washington Bureau in early 2001. He says that business/government stories ring different media bells.
GREG IP: I think throughout the late '90s there was no secret whatsoever that Wall Street investment banks were seriously conflicted when it came to doing analyst research. We at the Journal and other organizations wrote many, many articles about this, but it didn't really sort of like seize the political class's interest here in Washington until it took place against the backdrop of a recession and a bear market and scandal.
JOHN SOLOMON: While addressing the propriety of those conflicts is a responsibilty of legislators and regulators, the press was not very aggressive in asking them why so little action was taken. Alan Murray is the co-anchor of CNBC's Capital Report, a year-old primetime show that attempts to bridge the journalistic gap between business and government. He says journalism's structural difficulty handling these kinds of stories has historical roots.
ALAN MURRAY: It was only, what, 25 years ago that the New York Times adopted its business section, and before that time business reporters were sort of the, you know, the guy with the drinking problem that you pushed over on to the financial desk to write favorable stories about the local businesses. Journalism and politics seemed to be kind of the same thing, and business and economics seemed to be something very different. And so I think that whole realm of journalism has been slow to develop and then it developed as somehow separate from politics, and, and I think it took the events of the last year -September 11th, Enron - to really drive home to people that you can't separate these two things.
JOHN SOLOMON: Adding to the reportorial challenge is that these stories often go beyond just politics and finance and into the complexities of other industries such as energy, says Time magazine's
KAREN TUMULTY: But you do see in, for instance in California that the kind of manipulation that was going on in the market was something that probably could have used a lot more digging and a lot more explanation, and instead I think all of us in the media kind of defaulted to the politicians, to the, the war of words and the, you know, political machinations that were going on. And it really took probably a year before we actually saw, you know, why it was that people were running out of energy in California!
JOHN SOLOMON: Tumulty says that the media's coverage of the corporate governance issue has improved a lot over the past year, but Greg Ip warns that good economic news could undo some of the progress.
GREG IP: I think going forward there's going to be a lot more emphasis at news organizations put into trying to understand better accounting and financial and business issues, but that said, once the economy pulls out of the recession and, presumably it will; and once the Stock Market stops going down as presumably it will -- people's attention will shift to other things again.
JOHN SOLOMON: Ip says rotating reporters is one way to maintain that broad focus. But it will also help to have management move around as well.
GREG IP: I would say it's probably more important that our bosses -- that is to say, our editors and our bureau chiefs, spend some time rotating through bureaus and covering the different worlds because it's ultimately their responsibility to look at all the stories that we as an organization are covering and to see how they intersect and to come up to the reporter that's covering, for example, Enron as a company and say hey, maybe there's an issue here with respect to energy regulatory policy or to - with respect to its political connections to the president or the Congress.
JOHN SOLOMON: Charles Wheelan who teaches at the Medill School of Journalism and is the author of a new book, Naked Economics, says that newsrooms might take a tip from the business world to accelerate their team reporting efforts.
CHARLES WHEELAN: My guess is that you've got to assemble a group of folks who are expert on all the little pieces just as you might do if you were running a really complex corporation or something like that and start pooling information more than you do now, that's certainly not the normal practice for journalism. It's not traditionally been organized where there's an awful lot of sharing across areas. But my guess is that's something that's probably going to have to change.
JOHN SOLOMON: Change doesn't have to be hard. It can be as simple as tapping out a quick e-mail! When President Bush came into office many political reporters accepted the conventional wisdom in Washington that he managed just like a corporate CEO. That's because he worked shorter hours, insisted on a dress code and didn't sweat policy details. But they could have found out that those habits had little resemblance to the managerial style of most modern chief executives by either checking with their business section colleagues or even the CEOs of their own companies. For On the Media, this is John Solomon. [MUSIC]