Cut-It-Out Communications: PR and Politics

Public Relations and Economic Reality

There’s one field supposedly immune from public relations spin, and that’s economic markets. Traders make decisions based on underlying fundamentals, and people invest their money on the same basis.

However, the rationality of the markets is wildly overrated. Yesterday, we saw the Dow Jones plummet by 1,000 points (before recovering to a loss of “only” 300) based on a cascading set of fears triggered by a computer error.

Supposedly, when a trader in Chicago transmitted a sell order for a billion instead of a million, computer algorithms set in leading to a broad-based sell off. But humans were complicit as well, causing a panic and much consternation.

In general, financial markets may provide independent evaluation of various companies, currencies and national economic health, but they are not immune from bubbles and busts as we have observed all too clearly during the past few years. Investors are misled by feelings, stoked by unethical public relations campaigns designed to create a false impression.

Does this mean that public relations is bad per se? Of course not. Like any powerful tool, public relations can be used for good or evil. It can spread joy, inform people and create a more prosperous society. When used for more nefarious purposes, it commonly goes by the label “propaganda” instead. One remembers the Nazi line, “if you repeat a lie often enough, people will take it for the truth.”

The key when evaluating public relations campaigns is the execution of due diligence. Try to go beyond the headlines and ascertain the facts of a matter before taking precipitous action, as happened on the stock markets today.

Doing PR for Goldman Sachs

Goldman Sachs is currently experiencing a situation calling for, in public relations lingo, crisis communications. It has been beset by a series of high-profile stories stemming from the civil complaint filed by the S.E.C. alleging improper activity, namely promotion of a series of investments to its clients while shorting, or betting against, the very same investments.

It’s protestations of absolute innocence are particularly ineffective.

In my opinion, Goldman could contain the crisis if it acted in a similar way to Tylenol during the furor about tainted bottles of aspirin. The key is to respond to public concerns by leaning over backwards to rectify the situation.

Goldman Sachs could contain a furor that could eventually jeopardize its actual existence, by admitting its practices were unworthy of its reputation and taking steps to ensure it never occurs again.

There are a number of ways to do this. Goldman could create its own internal board of investigation regarding the matter. It could discipline key executives by either suspending them, or if they have already resigned, by halting payments to their pension.

The key factor would be to create some sort of internal monetary penalty on itself. This would be so contrary to the normal policy of greed on Wall Street that it may contain some of the damage. Further steps should involve consultations with public relations professionals, not lawyers!

Wall Street Sure Needs Some PR Help

Wall Street has a bad image. It goes beyond the basics of its fundamental philosophy, based on the greed factor, depicted in movies and popular culture during the 1980s.

 

It now encompasses a lack of feeling for the American people, a disregard for its investors and an attitude of selfishness about wrecking the American and worldwide economy. In fact, Wall Street’s current image shows a lack of remorse for its role in the above and a stubborn clinging to a lack of accountability for the future.

 

Wall Street received its latest black eye yesterday when Goldman Sachs was accused of fraud in a civil lawsuit filed by the S.E.C. Apparently, the company was promoting mortgage-backed securities to its clients while secretly shorting the investment, reflecting an opinion that it was bound to fail.

 

How can Wall Street recover even a veneer of respectability? Well, it would take some good hard honesty and repentance. Instead of contesting this suit, would it be so hard for Goldman Sachs to admit the malfeasance? If they’re going to be convicted anyway, and it looks like they will, why not try to salvage their reputation by denouncing the fraud and the people involved?

 

However, this involves the perennial problem between lawyers and public relations professionals. The lawyers say, “Shut up, don’t admit anything,” while the PR pros have a broader perspective of the situation. It does no good to be found innocent, even if that’s only a 10 percent possibility, if your business or reputation is shot, and you can no longer recover.

 

We’ll see how the Goldman Sachs situation plays out, but I fear they’ve received a serious, if not business-ending, hit.

Public relations and the deficit

One thing the Republicans are very good at: sticking to their talking points. It’s not so far removed from nefarious propaganda machines during wartime. Say something often enough, and people will believe that it is true.

 

The Republicans are harping on the deficit and the “runaway” spending during the Obama administration. Then, to box President Obama in even further, they are combining that attack with a fusillade about the unemployment rate.

 

Of course, to improve the unemployment rate, you need to spend money to stimulate the economy further, and that additional spending makes the deficit worse.

 

What’s a Democrat to do?

 

Well, it’s not that different from catching a wave in surfing. Short-term spending increases jobs, and jobs increase revenue. And then, you ride that revenue to reduce the federal deficit.

 

Easier said than done? Of course. But President Obama has some of the best economists in the world on his team, and if anyone can do it, he can.

 

The main problem is dealing with a recalcitrant Congress. A Congress that is also facing a volatile electorate in just a few months. Can they rise to the occasion? Well, if it were just the Democrats, I would say “maybe” though I would have a lot of doubts.

 

But when you throw Republicans into the mix, with their stated and unstated desire to create a “Waterloo” for President Obama, the willingness to do what’s right for the country seems to fade away quickly.