Truth, Hype, Hustle, and Fraud

One of the most effective tricks of the anti-business culture is to hold capitalists to a standard that they cannot possibly meet. For example, in the Martha Stewart case, U.S. Attorney James Comey declared: “This case is about lying.”

Can you imagine what Mark Twain would have said if you’d told him that businessmen in the twenty-first century would be sent to jail for making inaccurate statements? He would have written an uproarious short story about a twenty-first century America in which prison sentences were visited upon lovers who made inaccurate statements to each other. “This is a case about lying,” his prosecutor would scream to the mob. Waving before the press a billet-doux that read 'I shall adore you forever,' the prosecutor would yell: "No mortal can adore another mortal forever. That is plain deceit. That is outright fraud."

Look. Not every inaccuracy is a lie, and not every lie is a fraud. Yet, increasingly, the government is trying to make every mis-statement by a businessman criminally culpable, just as they were able to do in the Martha Stewart case. Those who value economic freedom need to push back strongly against this attempt. Business is hustling, and the line between truth and hype is usually a matter of perspective.

To secure a conviction for fraud, a prosecutor should have to prove that the defendant consciously deceived specific other people in order to lure them into money-losing transactions that they would not have entered absent the deceit. Bernie Madoff committed fraud. Executives such as Greg Reyes, who backdated options, did not. Yet tomorrow Greg Reyes goes to prison.

If our anti-business culture wishes to say that inaccuracies uttered by businessmen are deserving of prison, then let us apply the standard universally. Politicians who make mis-statements to their constituents should go to prison. Professors who make mis-statements to their students should go to prison. And journalists—especially business journalists—who make mis-statements to their readers should go to prison.

Update: I confess that I was surprised to find a law professor who took up the idea of subjecting politicians to the same constraints as executives. Let me be clear: My proposal was strictly rhetorical. I do not want other groups of Americans to be subjected to the rigid constraints that now bind businessmen. I want businessmen to enjoy the freedom that other groups--such as business journalists--enjoy in their profession.

‍