July 23, 2006

Week after week the New York Times financial columnist Gretchen Morgenson delivers one-sided, poorly reasoned but colorful attacks on American business. Although she addresses arguably significant problems, such as executive pay and defects in monitoring, she is much less interested in analyzing the precise nature of the problems or in proposing specific solutions than using in charges of specific misconduct to leverage up her broadsides. This week, for example, she says that stock options are "one of the biggest wealth redistributions ever fobbed off on American investors." Whether or not one takes Morgenson seriously, she undoubtedly helps create the regulatory environment that business must deal with. And so I follow Morgenson's Sunday strolls, trying to clean up her mistakes. Today I discuss Morgenson's implication that stock options cause criminal behavior.