Maddenation
Pigs at the Trough
For those of you who haven’t heard enough about Enron, Worldcom, Tyco, and other outrageous business scandals in recent months, Arianna Huffington’s book is for you. Well researched and wittily written, it delights and disturbs like few books I’ve ever read. If you have any doubts about the abuses possible under our “free market” system, Arianna will dispel them.
I have been enthusiastic about free markets ever since first learning about Adam Smith’s “invisible hand” in freshman economics. (Arianna refers to the invisible hand as a pickpocket.) For years, however, I have also been concerned about the ability of free markets to operate as they should when the underlying ethics of the general business population (and their facilitators in Congress) degrades to the point where getting caught is the only deterrent. As I now know, my concerns were justified. There’s something uncomfortable about harnessing greed for the common good. While greed is a common human passion, common good does not naturally flow from it’s unbridled application.
For the most part, the Pigs in Huffington’s book are CEOs who have taken hundreds of millions in compensation and ill-gotten gains from their corporations, often while running them into bankruptcy. Compared to these professional swine, the politicians who often facilitate their behavior through loophole-laden legislation look like pikers. Nevertheless, as Huffington points out, the rape of the republic by the greedy and powerful could not take place so readily without the surreptitious, back-room deals between business and government brokered by lobbyist lickspittles.
To be fair, the millions taken, most often legally, from our corporations by disreputable CEOs are not particularly significant compared with the trillions generated by our GNP. In fact, our juggernaut economy keeps on growing despite the abuses. The real rape has taken place in the stock market where trillions of dollars have been lost over the past few years by average investors like me. The use of stock options (the opportunity to buy stock at a low price in the future, after it has already gone up in value) to remunerate corporate officers has caused CEOs to focus on increasing stock price by whatever means available, including lying about profits and hiding debt. (Of course the most tried-and-true technique for increasing profits short term is to reduce the workforce.) What is legal in corporate accounting practices is often difficult to understand in light of common sense. One example is MIPS (Monthly Income Preferred Shares) that count as debt on the corporation’s tax return but as equity (investment asset) on it’s balance sheet. These, Huffington points out, were invented by New Jersey’s Senator Corzine while he was CEO of wall Street investment firm Goldman Sachs.
Is it hopeless? It depends on whether you’re a glass-half-empty or glass-half-full kind of person. Arianna includes suggestions for cleaning up the mess in her last chapter. To help us get active in the process of taking back our country, she also provides a list of 24 groups working to bring about reform. Some you know, like Common Cause and Sierra Club; others you don’t (necessarily), like Social Investment Forum and Program on Corporations, Law and Democracy (POCLAD). To entice us to get involved, Arianna quotes Roberk Kennedy: “Few will have the greatness to bend history itself, but each of us can work to change a small portion of events and in the total of all those acts will be written the history of this generation.” Get going!
Dad • Reviews • 03/20/04 • 1 comments
Comments
Patrick • 05/04/04 • 9:44 AM:From John Steinbeck:
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