OSTRICHES + THE STOCK MARKET

The belief that ostriches will stick their head in a hole in the ground when faced with danger is the stuff of legend – urban legend. Although it is true that they can sometimes be seen with their heads in the ground or seeming to dig a whole to do so, this action has nothing to do with fear, but with procreation. Male ostriches dig shallow indentations in the ground with their beaks to create a nest in which their mates will lay their eggs.  However, the myth persists that the world’s biggest bird is the animal kingdom’s biggest coward and would rather stick its head in the ground than defend itself from attack. If one were to suspend one’s knowledge of the bird’s true actions, one might be able to make comparisons between an ostrich’s seeming cowardice and the behavior of CNBC Mad Money host Jim Cramer during the financial crisis of 2008, which was featured in Case Study 2-B. It appeared to some that rather than face the reality of the burgeoning economic crisis, Mr. Cramer put his head in the ground – expounding bull market guidance – instead of recommending strategies his viewers could use to defend their wealth.  This extreme bullishness left Cramer with egg on his face  and viewers who acted upon his entertaining, yet flawed advice, with lighter nest eggs to see them through the lean times.

The authors of our text posed several questions relating to this case study, one of which challenged readers to compare the actions of Mr. Cramer on his show with the duties of a bank’s PR professional.  As a practitioner of public relations I found this question thought-provoking and have evaluated the case study using the ethics code set forth by the Public Relations Society of America (PRSA).

According to PRSA, its code is “designed to be a useful guide for PRSA members as they carry out their ethical responsibilities.” I find the code itself to be clear and easy to understand, and the tenets it proposes to be high minded and morally correct. The code suggests that a PR professional who chooses to follow the code will not only act with clear and honest intentions when dealing with or representing his or her client’s interests, but also will apply the code’s professional values (advocacy, honesty, expertise, independence, loyalty and fairness) when considering how his or her actions affect society at large. Looking at Case Study 2-B through that lens I would find Mr. Cramer in violation of several of the Code’s guidelines, but not of malicious intent.

The PRSA Code’s ‘Free Flow of Information’ section states:

       “…advancing the free flow of accurate and truthful information is essential to serving the public
       interest and contributing to informed decision making in a democratic society.”

I believe that Mr. Cramer’s brand of financial advice erred too heavily on the side of entertainment and personal opinion, failing to provide viewers with the information they needed to make informed decisions during a volatile financial time. Although I see some similarities between what Mr. Cramer does on his show and what a PR practitioner for a local bank is tasked with accomplishing, the situations between the two are quite different. Mr. Cramer was hired by CNBC to deliver sound financial advice to its viewers, but also to entertain them. He owes loyalty to his employer, but more so to his viewers. The more he gets it wrong, the less faith viewers have in him and the less likely they are to watch, which could lead to cancellation of his show by the network. Conversely, a PR professional for a bank advocates on its behalf, presenting it to the media, investors and the community at large in the best possible light. The bank employee owes his or her loyalty first and foremost to the bank and so, would most likely think of the bank's needs before those of the community at large. Unless Mr. Cramer (or CNBC) was accepting some form of compensation from the companies whose stocks he chose to promote or was compelled to push those stocks for some unseen reason, his duties differ significantly from that of a bank’s PR team. 

I would suggest that Mr. Cramer was not guilty of unethical behavior per se, but irresponsibility. He failed to provide his viewers with all the information needed for responsible decision-making or simply misjudged the turns the market would take. John Stuart Mill might argue that it was unethical of Cramer to poo-poo his viewer’s fears about Bear Sterns based only on his personal opinion since – if the viewer actually followed his advice and kept the stock – he would have lost significant amounts of money when the brokerage house was taken over by JP Morgan Chase. In Mills’ Utilitarianism view, the consequences of Cramer’s actions made them unethical as they potentially harmed many people.

The difficulty with using the PRSA code to review this case study was the seeming ambiguity of codes themselves. The PRSA code seems straightforward and absolute, but it appears that the authors and/or the organization as a whole may see the flaws in the guidelines as the preamble states that “emphasis on enforcement of the Code has been eliminated.” If a code is not enforced, or enforceable, does it hold its value? One could view removal of enforcement language from the code as an acknowledgement by the Society of what our text calls the changing view of truth. Pragmatists would argue that truth is relative so one practitioner’s perception (and execution) of any given code can be very different from another’s, but both be ‘true’ depending on the context in which the action takes place. 

I found the discussion questions at the end of the case study very helpful, prompting me to look at the case from many different angles, specifically, that of Cramer, CNBC and the public at large. And though I do feel that Mr. Cramer kept his head to the ground a little too long, I found his bullishness more an error of judgment than of malicious intent.

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