Two thoughts occur to me as I watch the implosion of the News Corporation phone-hacking scandal, and the apparent inability of the firm’s principals to understand the impact on the future and reputation of the world’s most powerful media company.

First, I understand how this kind of pathology can grow in a newsroom. If we are honest, most journalists will understand it.

Second, I wonder how many of our news organisations can be confident that their cultures are robust enough to prevent and detect this kind of practice.

But most of all, I am awed by enormity of what we are witnessing.

Does James Murdoch really think such a scandal, such a comprehensive breach of trust reaching so high into the government of a major Western nation, can be “put in a box“?

I suspect that instead history will see this episode as a significant moment in the long-term decline and break-up of the world’s last really big media empire.

News Corporation, headed by an ageing emperor, is losing friends and moral authority. Its leadership is also looking shaky, and not only because of Murdoch’s age. Was Murdoch telling the truth when he claimed, earlier in the affair, that there was no scandal, that it was rogue reporter? Or was he misled by those beneath him? Either way, it reflects poorly on his control of the company.

If Shakespeare was alive, he’d write a play about it. He understood empires, arrogance, age, and tragedy.

For those coming in late, a summary of the affair, admittedly written with a jaundiced eye, can be found here. It is now clear that what we have here is, not to put too strong a term on it, institutionalised corruption, at least at News of the World.

How can this kind of thing happen? It really isn’t so hard to understand. I am sure most journalists have at times champed at the frustrations involved in being lied to and fed information spun to fairy floss.

How much we hunger for the good leak, a stolen document or an unauthorised disclosure, to break through the confections. Journalists live on the edge. We have a tacit licence to talk to people off the record, to go outside the recognised channels by which information is released. Witness our own recently passed shield laws, that give us the right to protect our sources. This is recognition that walking in the world of the unauthorised disclosure is an important job and an important capacity to preserve in society.

Yet it takes us to a moral edge.

We would all take a stolen document, if it was a story. And the world’s best papers published the WikiLeaks cables.

In many Australian newsrooms, it is commonplace to find things such as reverse telephone directories, (which have been illegal in Australia)  illegal police scanners and devices to record telephone conversations without informing the subject that they are being recorded.

It can look like a small step from this to being the one who actually steals the secret document, or bugs the phone call. But the legal and moral difference is immense.

It  is precisely because journalists do dirty work, operating on moral boundaries, that the ethical rules matter. Yet those of us who have worked in media organisations know that it is rare for ethical codes to be referred to  taken seriously, if they stand in the way of getting the story. It is also almost impossible, particularly in this country, to enforce the codes.

News Limited in Australia, for example, has a code of professional conduct. Yet ask young reporters within the empire whether they are aware of its existence, let alone what it says, and you will get some idea of the priority it has in the organisation.

And if they were aware of it, they would naturally wonder how it was that it was sometimes honoured in the breach. The message the company gives — whether wittingly or no — is that reporters should concentrate on getting stories, and not argue the toss over ethical considerations.

Combine that culture with a lack of scrutiny and a fair dose of arrogance and it is easy to understand how the phone hacking began.

The real scandal, and the real worry, is that it wasn’t detected and stamped on hard. That tells us something about News Corporation, but also about the wider media world.