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News :: Miscellaneous |
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After Enron |
Current rating: 0 |
by Lee Drutman and Charlie Cray
(No verified email address) |
09 May 2002
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The Time Has Come to Establish a National Dialogue on the Role of Corporations in Society |
Practically every day we read about a new subplot in the Enron scandal. This week, it was the "smoking gun" documents that shed light on how Enron intentionally kept California energy consumers in the dark to fatten its profits. The week before, it was Enron's use of government investment to fund dubious overseas projects, like the disastrous Bolivia pipeline.
There are other more established strands, too - the off-the-books partnerships, the accounting faux pas, the workers who lost everything in company stock, the unusual access onto the Vice President's energy task force. The list goes on - everything Enron could have done wrong, it seems, it did wrong.
Enron has indeed become the easy villain, the caricature of pure evil. But what about Arthur Andersen, now in the midst of federal prosecution for obstructing justice by shredding document? What about Merrill Lynch, under investigation by New York State Attorney General Elliot Spitzer for telling clients to buy stock in companies that had no business being in business except that Merrill Lynch was selling them other banking services?
Start connecting the dots. What do all these transgressions have in common? What could explain why Enron, Andersen, and Merrill Lynch (and countless others, undoubtedly) all engaged in deceptive and fraudulent actions that they probably even knew were wrong, even as they acted?
The answer is simple - they didn't think they'd ever be caught. And why should they have? Others had been getting away with this kind of stuff for years. Everyone on Wall Street was saying "buy, buy, buy!" when they should have been advising investors to sell. Everyone in the accounting industry was used to signing off on cooked books if it meant business in the future. And everybody else was buying influence in Washington - why shouldn't Enron? These actions had become the norm. This was how you got ahead. These were the rules of the game.
After all, this was the rip-roaring' '90s. Regulation was out. The free market was a beautiful tonic, a law of nature that guaranteed everybody would get what they wanted when they wanted it and how they wanted it. Greed was good.
But now times have changed. Enron was caught. Good people are talking as much about the need for fundamental reforms as they are about the need for stronger enforcement. The California energy crisis and the abuse of securities markets have taught us that deregulation offers few benefits when it turns the system over to corporations whose main motivation is to make money, damn the consumers and their lives.
So, where to now? We might look to Congress for reform, but we've looked, and so far all we've seen is the House approve a pension reform bill that actually makes some rules worse for workers and the House approve an accounting reform bill that punts the meat of the reform responsibility into the lap of the Securities and Exchange Commission and its accounting-industry friend, Harvey Pitt.
Sure, the Shays-Meehan campaign finance law was a step in the right direction, but it only goes far enough to keep Washington's many campaign finance consultants busy drafting strategies to take advantage of the new loopholes.
The problem is that corporations are still basically in power. Under our current electoral system, it takes a heck of a lot of money to get elected to public office. Who has that kind of money? Big Business. Which means that big business, to a large extent, can select the kinds of candidates it wants, candidates who will likely turn a blind eye to transgressions of large corporations and even loosen existing regulations. That way it won't matter if investment banks are touting worthless stock because they helped underwrite the IPOs or if auditors are doing more non-audit business, creating the kinds of conflicts of interest that, according to Business Week, have cost investors $200 billion over the last six years as a result of 783 audits that overstated profits.
Elected officials need to exorcise themselves of the influence of corporate cash first of all by disgorging the money they took from Enron and Anderson. Then we need to push for fundamental campaign finance reform that establishes public election funding. States such as Massachusetts and Maine have taken strong steps in this direction. Ultimately, we need to take back our democracy by separating corporations (market fundamentalists) from the state the way we strengthened our system by separating it the other fundamentalist institutions -- "the church."
The time has come to establish a national dialogue on the role of corporations in society. Members of Congress can do their part by creating a commission on corporate power, a commission not only to review questions of corporate governance, but also to explore fundamental ways to return America into a democracy of the people, for the people, and by the people.
Lee Drutman and Charlie Cray work with Citizen Works.
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See also:
http://www.citizenworks.org
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