Newsweek's retraction of its May 9, 2005 article concerning American investigators desecrating the Koran at a detention center in Guantanamo Bay, Cuba —— along with what many believe to be a rather halfhearted apology by its editor, Mark Whitaker —— should act as a wake—up call for America's mainstream media outlets.  But, don't count on it. 

Regardless of the number of people who died in the Afghani riots incited by this article, or how this could further inflame anti—American sentiment throughout the Arab world putting our troops in even greater danger, there won't be any criminal or civil prosecutions at Newsweek, or high—profile terminations resulting from this matter. 
 
This raises a question almost as serious as the lives lost due to this incident: What is America going to do to finally stop the rise in inflammatory "yellow journalism" continually emanating from our nation's top news agencies?

After all, in the past few years: we have had multiple scandals at The New York Times; CBS News was found to have participated in a fraud when it presented forged documents concerning President Bush's military record just months before the 2004 elections, and; one of our nation's top newsweeklies has unintentionally caused anti—American riots in a country that our soldiers risked their lives to liberate after 9/11 all due to an article that has been subsequently retracted.

Let's face it, folks, this is VERY serious stuff.

Yet, Newsweek —— like the rest of the news media —— believes itself to be Constitutionally sheltered from any consequences for its actions in ways that no other industry is.

For instance, if a company in this nation is found to have intentionally —— or, even accidentally —— misinformed the public about its products or services, it faces serious fines and the possible revocation of its business licenses from a variety of regulatory agencies. This is true of every major industry group: law; medicine; stockbrokerage; real estate; banking; telecommunications; electronics; technology; lending; insurance; advertising; manufacturing; pharmaceuticals; automobiles; you name it.

By contrast, the news media can spew fraudulent information about political officials, erroneous data about the economy, fabricated desecrations of holy religious documents —— basically anything they want —— without regard for its accuracy, and with total impunity.

As a result, I have been suggesting for several years that in order to improve the integrity of media content, America needs "Truth in Reporting" laws similar to those implemented in the banking and lending industries in 1991 after the savings and loan crisis.

For those unfamiliar, the 'Truth in Savings' and 'Truth in Lending' acts established uniform codes and regulations for all financial services companies that offer deposit accounts and loans, while mandating serious penalties for violators.

In addition, as a result of the 2002 Sarbanes—Oxley bill, CEOs and CFOs now have to sign off on the accuracy of the financial reports issued by their companies.  Any inaccuracies —— whether intentional or accidental —— can be punishable by civil and criminal penalties including but not limited to five—year prison sentences, significant fines, and other disciplinary actions that could lead to violators being barred by the SEC from ever serving as a corporate officer or director in the future.

So why isn't there similar legislation requiring the principals of media companies to sign off on the accuracy of the articles in their publications or the reports offered by their newscasters and announcers?  Is this a First Amendment issue? 

Hardly.  According to Cornell Law School, the First Amendment offers no additional protection to members of the press concerning freedom of speech than it does anybody else:

'Despite popular misunderstanding the right to freedom of the press guaranteed by the first amendment is not very different from the right to freedom of speech. It allows an individual to express themselves through publication and dissemination. It is part of the constitutional protection of freedom of expression. It does not afford members of the media any special rights or privileges not afforded to citizens in general.'

Given this, if such concepts as truth in advertising, truth in savings, and truth in lending in no way impinge upon the first amendment rights of the industries governed by such regulations, shouldn't we be able to require truth in reporting without violating the freedom of the press?

Furthermore, if our nation believes that it's imperative for business leaders to accurately report the financial results of their companies —— so much so that we'll put people in jail for doing any less —— shouldn't we hold the industry that delivers information to us concerning events in our nation and around the world to such a standard?

More to the point, if Newsweek's CEO, Richard Smith, as a result of this incident, were brought up on charges similar to those facing Dennis Kozlowski of Tyco or Kenneth Lay of Enron, media organizations might think twice in the future before they printed inflammatory articles based upon information derived from only one nameless source.

Or maybe we should just accept an apology from Kozlowski and Lay.  After all, nobody died from their indiscretions.

Noel Sheppard is an economist and writer residing in Northern California.  He welcomes your comments at slep@danvillebusinesscenter.com.