The Great Milk Panic of 2007: An Exercise in Newsflow Aribtrage?

Moral crusades advance claims about both the gravity and incidence of a particular problem. They typically rely on horror stories and “atrocity tales” about victims in which the most shocking exemplars of victimization are described and typified. Casting the problem in highly dramatic terms by recounting the plight of highly traumatized victims is intended to alarm the public and policy makers and justify draconian solutions. At the same time, inflated claims are made about the magnitude of the problem. A key feature of many moral crusades is that the imputed scale of a problem … far exceeds what is warranted by the available evidence.

Bribery of the news media in too many countries robs citizens of credible information they need to make personal and collective decisions. — International Index of Bribery for News Coverage (2003)

Mass hysteria and stupidity can make a real difference to a business’ bottom line. … –Rhymer Rigby. “Craze Management.” Management Today. London: Jun 1998. p. 58

Writing for the Observatório da Imprensa (Brazil), public relations executive Carlos Brickmann at least touches on a potential angle to the strange saga of the tainted milk that I have been wondering about myself.

A follow up to

The “moral panic” ran high in coverage of that story. See, for example,

Lembra do leite longa-vida com soda cáustica? Pois bem: o laudo do Instituto Nacional de Criminalística mostra que o leite não tinha soda cáustica. Lembra do leite longa-vida com água oxigenada? Pois bem: o laudo do Instituto Nacional de Criminalística mostra que o leite não tinha água oxigenada. A notícia foi publicada pela imprensa com muita, muita discrição. E muita gente nem percebeu.

Remember the UHT milk with lye in it? Well, then: The National Criminalistics Institute report showed that the milk did not contain lye. Remember the UHT milk with hydrogen peroxide in it? Well, then: The National Criminalistics Institute report showed that the milk did not contain hydrogen peroxide. The news was reported by the press with much, much discretion. A lot of people did not even notice it.

There was a very short announcement on TV Record that we saw.

Strictly speaking, it found that

The reports say that one cause of the alkalinity could be lye, used to increase the volume of the milk, but also entertain the hypothesis that the change could be caused by sodium citrate or other sales, such as carbonate or bicarbonate, as well as sodium phosphate or sodium chlorate. They also did not prove the use of hydrogen peroxide, also identified by the PF based on preliminary analysis.

In other words, some pH-balancing agent was probably used, but it could have been a legal ingredient (used in illegal amounts), an illegal but essentially innocuous ingredient, or possibly even lye. At any rate, it does seem to indicate that the risk of milk making your guts explode may have been greatly exaggerated.

O leite não era dos melhores, claro. Quem quer leite bom de verdade compra leite fresco. Talvez possa usar leite em pó de boa marca, dissolvido em água devidamente tratada e filtrada. Leite que vive fora da geladeira sempre tem conservantes. Mas não era nada que fizesse mal à saúde.

This was not the best milk, obviously. If you want really good milk, you buy it fresh. You might use powdered milk of good quality, made with water duly treated and filtered. Milk that lives outside the refrigerator always has preservatives. But nothing that might make you sick.

Mas, se o leite longa-vida era exatamente o que prometia, ser um leite longa-vida, qual o motivo do escândalo? Talvez a explicação esteja numa curiosa coincidência de datas. Uma das empresas mais atingidas pelo escândalo foi a Parmalat, hoje pertencente a um fundo de investimentos, o LAEP. E o noticiário explodiu bem quando a LAEP preparava a oferta pública de ações (IPO) da Parmalat, na Bolsa de Valores de São Paulo. O pessoal da empresa estava em road-show no exterior, preparando o lançamento, e teve de voltar rapidamente ao Brasil, para enfrentar o terremoto.

But if long-life milk was exactly what it promised to be — milk with a long shelf life — then why the scandal? Perhaps the explanation lies in a curious coincidence. One of the companies most affected was Parmalat, which now belongs to the investment fund LAEP. And the news exploded just when LAEP was preparting an IPO of Parmalat on the BOVESPA stock market. Employees of the company were out doing their roadshow, getting ready to launch their shares, and had to return rapidly to Brazil to deal with the earthquake.

Vale matéria, caros colegas. Este colunista aprendeu desde cedo a desconfiar de coincidências. E ainda se lembra com clareza da época em que a água Lindóia foi massacrada pela imprensa, por conter uma bactéria nociva. Depois que uma empresa concorrente lançou sua água em copos descartáveis, a bactéria nociva desapareceu da imprensa. Teria sido coincidência, também?

It is a story that is worth an article, my dear colleagues. This columnist learned early on to distrust coincidences. And one still remembers clearly how Lindóia water was massacred by the press because it contained a harmful bacteria. After a competitor launched its water in disposable cups, that noxious bacteria disappeared from the news. Was that a coincidence, too?

I do indeed believe — I can cite examples — that the news media here is sometimes — perhaps quite often — for rent in the service of business competition by means of the media-driven gabbling ratfink.

Or for the flip side of the coin: For reality-challenged happy-talk evangelism and stealth advertorial.

This is is what we mean by newsflow arbitrage: Stampede suckers toward a belief you know to be gibbering nonsense, while quietly taking a short position on your own bullshit. See also

I mean, the job that TV Globo did on this water filter company was something else, and represented a case in which Globo journalists from the same program employed both “happy talk” evangelism and gibbering FUD on pretty much the exact same issue at different times:

Now, this is a company that may be making claims for “magnetized water” that the FDA and FTC back in the United States would probably not allow. Or not.

The point is that you learn nothing about such issues by watching the report, which is pure commedia dell’arte of journalistic diligence.

All you see there is the company subjected to a “guilt by association” perp-walk with a bunch of sleazy, street-level con artists, loan sharks, and “love gurus.”

Reporting on the Cisco case was deeply imbued with moral panic as well, I thought.

I have neither love nor dislike for the company, or a stake in its success or failure — I have a wireless router of theirs that works pretty okay, and that is about the extent of my personal involvement. I find what it does interesting things, including its “digital divide” programs. I like to study such programs. Some of them actually seem to have value for the people they serve.

It seems to be facing greater competition now in a market that it has dominated for a long time, in a tech-sector version of the Treaty of Tordesillos.

But general-interest reporting on the “Brazilian Cisco in Deep Brazilian Crisco” case simply failed to cover the public-interest issues in the case — most notably, I thought, that federal tax officials were arrested for taking bribes in the case.

With taxes high on the news agenda here in Brazil, and given that no one anywhere is likely to tell you that paying taxes is a joy forever, the very notion that the galley slave next door may not be pulling his oar with the same oompoh that you are because he has paid off the slave-driver seems naturally exasperating, and of general public interest.

Just a couple of examples, which could be multiplied:

The worst of it was when the Folha de S. Paulo tried to make a political corruption case out of it — and the principal fact on which it based its inferences in this general direction turned out to be, ahem, nonexistent.


This is why I do not buy the Folha.

The major business press was possibly worse.

Readers of the mass-market press may find “the folklore of the evil corporation” emotionally satisfying, in a puerile way, but readers of business publications tend to like to think of themselves, at least, as above all such nonsense.

And readers of business publications who are actually good at business tend to actually be above most of that nonsense, I tend to think.

There are many evangelists out there telling emotionally compelling stories to separate you from your investment capital, but the consensus best investor in the world, good old Warren Buffet, has all the charisma of good, honest Midwestern flood insurance salesman who bowls in a Kiwanis Club league on Saturdays and likes to sit out on the porch swing of a summer evening.

There were many ways of approaching the “Cisco in Deep Crisco” story for a business readership, but I thought maybe the most natural one would be the “Shit! Am I next?” risk-management angle.

In any event, some sort of standard “lessons learned” type of story. Kind of like this one:

Cisco has an innovative reseller network in which, ahem, adult supervision was apparently found to have fallen short of the desirable level of effectiveness.

There is a substantial literature by skeptics who have been warning for years that the notion of frictionless e-outsourcing in which adult supervision can be conducted by e-mail or IM is a form of magical thinking.

Those people deserve the chance to say “I told you so,” because, really, they called the risk accurately, didn’t they? They are successful prognosticators. It would be useful to ask them, “How did you know this would happen? Who might it happen to next? What can we do to avoid this happening to us?”

Instead, crapola like this:

The game of Chinese whispers between colonial (senzala) stringers and metropolitan (casa-grande) editors also came into play, I think:

The issue of gabbling ratfinkers for hire, here in Brazil — I often think Veja should just rename itself Gabbling Ratfink and Happy-Talk for Hire magazine (or, in local lingo, how about Revista Jabaculê?) — is often alluded to but never discussed concretely.

See, for example,

I often wish journalists and journalism-watchers here would come and say what they mean on this point, naming names and shaming the shameful.

Veja, which is often tarred with this brush — for good reason — works extremely hard to make sure that others get tarred with it as well. See, for example:

Click to zoom. The Grupo Abril’s Veja magazine (Brazil) does a cover story in January 2007 on the iPhone: “It’s like magic!” In June 2007, Steve Jobs calls it “a magical product.” If you think that’s a coincidence, I have a bridge you might like to take a look at.

Naming and shaming is not, of course, easy to do.

There is an old-boys club to deal with, for one thing — and a tight job market for journalists, to boot, as employees of Meio&Mensagem magazine reportedly know to their great sorrow. See

And it is also very rare that you have a case like that astonishing Vladivideo epsidode in Peru, where you watch a newspaper publisher taking a humongous bribe with the understanding that he will cheerfully ratfink the enemies of the bribe-payer in exchange.

The founder of La Razón — which seems to still be at it.

(It is always strange to be called a “colleague” by the owner of a PR agency.

I do work in PR sometimes, but unlike Brazilians, I am very clear in my mind that when I am, I am no longer doing journalism. I am doing something else.

Something perfectly legitimate if carried out competently and honestly, as most professionals in the field do. But not journalism.

I wonder if Mr. Brickmann’s firm represents any dairy-related clients?)

So yes, down here in Brazil, in the antipodes, where everything is topsy-turvy, I sometimes find myself feeling unusually sympathetic to the flacks, even though I identify more closely with the hacks.

As gringo slang terms PR people and news reporters, respectively.

There is a “flacks v. hacks” softball game every summer in Central Park, for example. TV Globo correspondents reportedly switch sides constantly, depending on who is winning in any given inning.

There is a lot of really, really crooked nonsense going on down here — as well as a lot of gabbling ineptitude. It is actually quite common to see journalists caught practicing the former pleading that it was really a case of the latter. See, for example

Not that there is much of a practical difference, from the reader’s point of view: Deliberate disinformation is just another kind of misinformation.

The nonexistent fact is nonexistent in either case. A jaw-dropping recent example of a major news organization trumpeting a nonexistent fact:

Disclosure: I do not own any shares in, or work for, any of the companies discussed here.

I do actually own 100 shares of CME — the first stock I ever owned, which I bought after I quit my last full-time job, where owning it would created a conflict of interest. (Not that anyone really cared. Which was part of the reason I quit.)

But I really doubt that this blog, even with its vast army of readers — Hi, Mom! — could create enough hype or FUD to make them move in a direction favorable to my(relatively piddling) long or short position — even if I really understood the CME’s business enough to bullshit you convincingly about it.

Or stock trading, for that matter.

Here is my approach to stock trading: I buy the stock. If it starts to tank, I sell it. If it goes up, I am happy, and hang onto it. Once in a while I will fiddle with the stop-loss amount.

Not that my online brokerage actually executes stop-loss orders effectively, mind you. The one time one of my stocks approached the stop-loss line, my online brokerage executed the order at the wrong price. All hail the omnicompetence of the intelligent algorithm.

I look at my brokerage account about once every six months. I have a tiny, tiny portion of my assets in this sort of thing. I am your grandma, buying war bonds and saving bottle caps for free steak knives. I am, in other words, a total rube. One of those suckers who figures he is basically just going to have to work for a living. But I do okay.

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