I could say, I told you so. But so what? This was an easy one to see coming: Greed still rules. Congress and the administration are too timid and too beholden to confront Enron on the scale it deserves.
The big issues of corporate citizenship and executive compensation are passing right over the heads of our elected leadership. For many Americans, the Enron scandal and everything we've learned since hit our society with a staggering blow. We were rocked down deep in our beliefs. Our sense of social integrity was undermined, not to mention the security of thousands of people.
But in this case, Washington is too deeply infiltrated to go to battle. If President Bush had been as tepid in responding to Al Qaeda as he has been to Enron et al, you could lop the zero off his 80% approval rating. As for Congress? Milquetoast.
Is it enough, or 1/1,000th enough, to say that if you're an executive on the scam you have to give back your bonus and your country club membership? The president's proposal is about as fangless as telling burglars that they have to give the loot back if they get caught.
Oh, but they're going to save our 401(k) plans in Washington. Ha. Imposing formulaic diversity in our retirement investments is the heavy hand of government clamping down on the wrong neck. If I believe in the Tribune Co. and want to stake my future with my employer, should government tell me I cannot? Do we order Microsoft workers to invest in other companies?
Government--that is, us together acting in our collective interest--owes the country a free-enterprise system we can trust. One motivated by honorable incentives. We don't need Washington to devise an investment plan for us.
The lessons of Enron and Global Crossing and the rest are simple: Corporate gamesmanship has wandered out of control. Public corporations and their officers have a responsibility to the public, and when they abuse it, the ax must fall just as surely as it does on the thug who snatches your purse.
Bush is correct in saying we don't need more tedious investor lawsuits. But he is wrong in overlooking that our social system, which includes the business of business, is fundamentally based on checks and balances. We desperately need some now.
This is not liberal corporate-bashing. This tired partisan argument about freedom versus regulation is the reason we're in this fix. The most conservative idea in the free-enterprise playbook is honesty. If you suggest that this is a matter of interpretation or discussion, then you're no different than those excuse-makers who would forgive the armed robber because he got picked on in grade school.
The securities laws of the U.S. were written to guarantee that investors have access to the basic financial information about public companies. Like worms in the hull of a wooden boat, lawyers and lobbyists and their courtesans in government have spent a half-century hollowing out the law with exceptions, loopholes and qualifiers--all of them tantalizing enticements to test the limits.
To keep this leaky ship from sinking, what we need now are not ever more complicated regulations, which is Washington's way of trying to paper over this scandal. We need far fewer pages of regulation, and better ones. We need to go back to fresh planking: Corporations reporting their earnings and obligations. Those who make mistakes should be accountable. Fraud is a crime.
Stealing with a fountain pen is no different than with a six-gun, as the old folk song goes. No more of this polite white-collar crime that is pardoned by paying a fine and admitting no guilt.
That is the "check." Honest, well-managed companies thrive. As for the "balance," we need to redirect the incentives for economic competition.
How many millions of dollars are enough for the wheeler-dealers? We should be careful not to lump all entrepreneurs in the same rotten barrel, but it's obvious now that the fiercest competition in American boardrooms is for the singularly venal purpose of obtaining the biggest salary, the most overinflated bonus, the largest stock options, the most outrageous pension, the fanciest ranch in Aspen.
Give us back a progressive tax structure. Ratchet up those brackets so that anything over $10 million--or $50 million, or whatever million--is taxed mercilessly. Remember those 90%-plus tax rates for millionaires in the salad days of the 1950s?
If they cannot keep the money--worse, if they have to give it to government--corporate leaders will stop competing so frantically for it. Put the cash in R&D, or modernization, and let's watch as executives try to outdo themselves for something better, like customer service or product quality.
Copyright 2002 Los Angeles Times