LAST FRIDAY, a jury convicted Martha Stewart of lying about a 2001 stock sale in which her broker gave her insider information on pharmaceutical maker ImClone. The next day, The Atlanta Journal-Constitution called Stewart the "highest-profile figure in a procession of corporate scandals that emerged after the tech stock boom-and-bust of the 1990s." The Los Angeles Times described her as "the first major figure convicted by a jury in the wave of corporate scandals." And The New York Times called her "the latest and most prominent executive to be convicted since a wave of corporate scandals unfolded with the collapse of Enron." Reading the papers, you could be forgiven for thinking that the queen of American homemakers had done as much damage to American investors as WorldCom bad boys Bernie Ebbers and Scott Sullivan.
That's ludicrous. Stewart may be both a corporate executive and guilty of wrongdoing, but that doesn't mean she's guilty of corporate wrongdoing. Her position at the top of a company, Martha Stewart Living Omnimedia, is relevant only inasmuch as it made her a power client for whom her broker apparently believed that breaking the rules was acceptable. By taking advantage of insider information, she was acting as an individual, not an executive. Which is why her case is so different from those of Ebbers, Jeff Skilling, or John Rigas, who allegedly used their positions atop WorldCom, Enron, and Adelphia to construct elaborate frauds that enriched not only themselves but their fellow executives--at a steep cost to lower-level employees and the investing public, not to mention the thousands who depended on the services their companies provided. Those cases point to something deeply wrong with both American corporate ethics and the system designed to enforce them. The Stewart case simply reinforces what we already know: Some people are greedy. Thanks to the media attention surrounding the Stewart verdict, however, readers may inaccurately conclude that corporate justice, rather than celebrity justice, has been served in this case. And, given the public's low tolerance for complex accounting scandals, they might well tune out coverage of the upcoming Ebbers and Sullivan trials. Which is too bad, because, if they paid attention, they might notice that the feds have constructed a relatively weak case against Ebbers and that Sullivan has already agreed to cooperate, guaranteeing him a lighter sentence. It's the media's job to provide such scrutiny and to explain to the public why such cases are important. By muddling the meaning of the Stewart case, they've made that job a lot harder. And that's not a Good Thing
Contested Selection
THIS WEEK, The New York Times and The Boston Globe claimed to have struck a blow against the conventional wisdom. After each early primary, political reporters and Democratic Party flacks had hailed heavy voter turnout as a good omen for November. But, now that the Times and Globe had hard numbers in hand, they forcefully knocked down those claims. As the Times headline blared, "democratic primaries' turnout is said not to have been strong." Close observers of politics, however, should have immediately recognized a flaw in the story: The reporters cited a study that originated with Curtis Gans, director of the Committee for the Study of the American Electorate. Gans has made a career of publishing reports decrying the decline in voter turnout and the decrepit condition of our democracy. And, sure enough, analyzing this political season, Gans argued that "disinterest in these primaries ... augurs ill for the American political system."
Fortunately for the Republic, Gans can only make such dire predictions because he uses bunk numbers. In 2001, for instance, the political scientists Michael McDonald and Samuel Popkin published a decisive refutation of Gans's analyses, arguing that his statistics rely on sleight of hand. The base population Gans uses includes a growing population of unnaturalized immigrants and felons who can't legally cast ballots. When McDonald and Popkin removed these noneligibles from the model, they found that turnout has hardly spiraled downward in the postwar era. "[T]he turnout rate is not in free fall," they argued in a Washington Post op-ed in 2000. This year, again, Gans's claims are full of holes. For starters, his study doesn't include the Iowa caucuses, where 125,000 voters showed up, tying the 1988 turnout. And, in the Times, he dismissed the high turnouts in Arizona, Delaware, and South Carolina as not significant. Those states haven't had many primaries, he argued, so there's no good basis for comparison. But that's culling the evidence rather selectively. South Carolina's turnout rate, for instance, more than doubled from the contested 1992 primary. True, voter turnout was lower in states that held later primaries, but it's also true that, after the February 3 contests, a Kerry nomination was pretty much inevitable. So, unfortunately, was Gans's doom-and-gloom analysis.
Finder's Keepers
"Editor's note: The following are highlights of Vice President Dick Cheney's remarks at last night's annual Gridiron dinner. Although the speech is off-the-record, they were obtained by The Daily Standard."
--The Weekly Standard's explanation for why its daily website published not-for-publication material on March 7.
Depends on Your Definition of "High-Ranking"
"Despite Mr. Kerry's crocodile tears about the Republican 'attack machine' and 'smear' campaign, neither the President nor any other high-ranking Republican has so far taken a serious jab at either Mr. Kerry's character or his record."
— Wall Street Journal editorial, March 5
"[The Democratic presidential candidates are] for tax cuts and against them. For NAFTA and against NAFTA. For the Patriot Act and against the Patriot Act. In favor of liberating Iraq and opposed to it. And that's just one senator from Massachusetts."
—President Bush, February 23
You Don't Say
"Stewart's celebrity created magnet for scrutiny"
—Headline of a front-page "News Analysis" of the Martha Stewart case in The New York Times, March 7
This article appeared in the March 22, 2004 issue of the magazine.