THE BEST BUSINESS WRITING 2012 Columbia Journalism Review Books Columbia Journalism Review Books Series Editors: Victor Navasky, Evan Cornog, Mike Hoyt, and the editors of the Columbia Journalism Review For more than fi ft y years, the Columbia Journalism Review has been the gold standard for media criticism, holding the profession to the highest standards and exploring where journalism is headed, for good and for ill. Columbia Journalism Review Books expands upon this mission, seeking to publish titles that allow for greater depth in exploring key issues confronting journalism, both past and present, and pointing to new ways of thinking about the fi eld’s impact and potential. Drawing on the expertise of the editorial staff at the Columbia Journalism Review as well as the Columbia Journalism School, the series of books will seek out innovative voices as well as reclaim important works, traditions, and standards. In doing this, the series will also incorporate new ways of publishing made available by the Web and e-books. Second Read: Writers Look Back at Classic Works of Reportage , edited by James Marcus and the Staff of the Columbia Journalism Review Th e Story So Far: What We Know About the Business of Digital Journalism , Bill Grueskin, Ava Seave, and Lucas Graves Th e Best Business Writing 2012 , edited by Dean Starkman, Martha M. Hamilton, Ryan Chittum, and Felix Salmon Th e Art of Making Magazines: On Being an Editor and Other Views from the Industry , edited by Victor S. Navasky and Evan Cornog THE BEST BUSINESS WRITING 2012 Edited by Dean Starkman, Martha M. Hamilton, Ryan Chittum, and Felix Salmon Columbia University Press New York Columbia University Press Publishers Since 1893 New York Chichester, West Sussex cup.columbia.edu Copyright © 2012 Columbia Journalism Review All rights reserved Columbia University Press books are printed on permanent and durable acid-free paper. This book is printed on paper with recycled content. Printed in the United States of America p 10 9 8 7 6 5 4 3 2 1 References to Internet Web sites (URLs) were accurate at the time of writing. Neither the author nor Columbia University Press is responsible for URLs that may have expired or changed since the manuscript was prepared. Contents xi Introduction xix Acknowledgments Part I. Bad Business 2 1. The Dark Lord of Coal Country Jeff Goodell Rolling Stone 26 2. Missing Milly Dowler’s Voicemail Was Hacked by News of the World Nick Davies and Amelia Hill The Guardian 32 3. Phone-Hacking Crisis Shows News Corp Is No Ordinary News Company Jay Rosen The Guardian vi Contents 38 4. The Bugger, Bugged Hugh Grant The New Statesman 50 5. A Case of Shattered Trust Raquel Rutledge and Rick Barrett Milwaukee Journal Sentinel Part II. Th e Financial System and Its Discontents 74 6. The “Subsidy”: How a Handful of Merrill Lynch Bankers Helped Blow Up Their Own Firm Jake Bernstein and Jesse Eisinger P r o P u b l i c a 82 7. Countrywide Protected Fraudsters by Silencing Whistleblowers, Say Former Employees Michael Hudson iWatch News 98 8. Curse the Geniuses Who Gave Us Bank of America Jonathan Weil Bloomberg News vii Contents 104 9. Is the SEC Covering Up Wall Street Crimes? Matt Taibbi Rolling Stone 120 10. In Financial Crisis, No Prosecutions of Top Figures Gretchen Morgenson and Louise Story The New York Times Part III. Over Th ere 136 11. Time for Germany to Make Its Fateful Choice Martin Wolf Financial Times 142 12. In Norway, Start-Ups Say Ja to Socialism Max Chafkin I n c . Part IV. Politics and Money 162 13. Swiped: Banks, Merchants, and Why Washington Doesn’t Work for You Zach Carter and Ryan Grim The Huffington Post viii Contents 178 14. Stop Coddling the Super-Rich Warren Buffett The New York Times 182 15. Blame for the Financial Mess Starts with the Corporate Lobby Steven Pearlstein Washington Post 190 16. Nine Things the Rich Don’t Want You to Know About Taxes David Cay Johnston Association of Alternative Newsweeklies 208 17. The Hijacked Crisis Paul Krugman The New York Times 212 18. Greenspan, Rubin, and a Roomful of Hypocrites Morgan Housel The Motley Fool P a r t V. Th e Big Picture 220 19. The Rise of the New Global Elite Chrystia Freeland The Atlantic ix Contents 244 20. Can the World Still Feed Itself ? Brian M. Carney The Wall Street Journal 252 21. Law School Economics: Ka-Ching! David Segal The New York Times 264 22. When Patents Attack! Alex Blumberg and Laura Sydell This American Life 302 23. The Illusions of Psychiatry Marcia Angell The New York Review of Books 318 24. From Inside Job Charles Ferguson, Adam Bolt, and Chad Beck Representational Pictures Part VI. Corporate Stories 328 25. Inside Pfizer’s Palace Coup Peter Elkind and Jennifer Reingold, with Doris Burke Fortune x Contents 356 26. It Knows Daniel Soar London Review of Books 368 27. Innovators Don’t Ignore Customers John Gapper Financial Times 374 28. House Perfect Lauren Collins The New Yorker 402 29. Voting to Hire a Chief Without Meeting Him James B. Stewart The New York Times 408 30. How Ford Became Last Man Standing Bernie Woodall and Kevin Krolicki Reuters 422 31. What Made Steve Jobs So Great? Cliff Kuang Fast Company 429 Permissions 433 List of Contributors Introduction Dean Starkman n the wake of the fi nancial crisis of 2008, Damian Tambini, a Iprofessor at the London School of Economics, wrote a paper that asked a pretty basic question: “What Is Financial Journal- ism For?” As it happens, Tambini found that no one could really agree what business and fi nancial journalism is for, or even who it’s for: Is it for investors? Markets? Or is it for everybody, the public? We believe we know the answer: Yes. Welcome to Best Business Writing 2012 , the fi rst in an annual series that will collect the best English-language writing on busi- ness, fi nance, and economics. For the past several months, the editors have conducted a thorough, and thoroughly unscientifi c, search for what we believe is “the best.” We start out with a good vantage point. I run “Th e Audit,” the business-press section of the Columbia Journalism Review , and part of our job is to read as much of the business press as we can and comment on the good, the bad, and the ugly (hey, it’s a living). Beyond that, our fearless panel scoured the Internet, approached traditional and nontra- ditional news organizations for what they thought was their best, and asked people in our networks what they had read and liked. We also asked Twitter and received some of our strongest entries. We didn’t care about medium. Th is book has newspapers, xii Introduction magazines, blogs, radio, even a movie. I’m sure some great busi- ness writing has gotten by us, but not much. Th e result is a collection of nonfi ction writing of the highest caliber. Never mind the subject, these are fantastic stories. You will fi nd a riveting yarn of executive-suite intrigue at a major multinational corporation (psst, it’s Pfi zer); fascinating behind- the-scenes profi les of business behaving badly (Countrywide, Massey), business behaving brilliantly (Ford), and business behav- ing weirdly (Ikea). You’ll read trenchant critiques of failed policy makers (yes, Greenspan is there) and business boners (Netfl ix, Hewlett Packard). You’ll fi nd penetrating looks at a distorted market (psychotropic drugs) and searing investigations. We have insightful think pieces on subjects including the rise of the new elite, Steve Jobs’s genius, and Google’s omnipresence. And authors? We’ve got the incomparable James Stewart, Gretchen Morgenson, Paul Krugman, John Gapper, Marcia An- gell, Martin Wolf, Chrystia Freeland, David Cay Johnston, not to mention noted business reporters Hugh Grant and Warren Buffett. Rolling Stone ’s Matt Taibbi? Of course. (If not all of those names are familiar to you, that’s okay; that’s what we’re here for.) But so, too, are people less well known but probably not for long: Michael Hudson, Raquel Rutledge and Rick Barrett, Max Chafk in, and Nick Davies, who for several years has been driving the story about phone hacking and other misdeeds at Rupert Murdoch’s News Corp. For us, the value of a collection of great business and fi nancial writing is self-evident. But we think this book is more than a good idea, more even than a collection of great reading. In some ways, our times demand it. Th e Great Crash of 2008 was, of course, a watershed event— in fi nancial history but also in the history of the United States and the whole world. Th e fi nancial crisis rocked great fi nancial institutions, drained public treasuries, fomented political up- heaval, triggered a crisis in Europe, and plunged much of the xiii Introduction world into a long economic winter. Its total economic and hu- man cost is beyond measure. While historians will be debating the causes for decades, a consensus has formed around one thing: the degree to which the collapse took “everyone”—fi nancial pro- fessionals, regulators, journalists, and, certainly, the public—by surprise. I put “everyone” in quotes because a disparate group of pro- fessionals—an economist here, a handful of Wall Street traders there, a couple of hedge funds, even a journalist or two—has been identifi ed as having duly warned of, or at least profi ted from, the great crash centered on the U.S. mortgage market.