I'm only halfway through Nomi's book, but so far it is terrific. Here
is her latest piece from Newsday.
<>Also, congratulations to Joel on his new book, which also sounds very
interesting.
http://www.newsday.com/news/opinion/ny-vppri25a4018486oct25,0,5577448.st
ory?coll=ny-viewpoints-headlines
CORPORATE SCANDALS
Nobody's taking care of bad business
Runaway fraud and corruption are costing jobs, pensions and the future
prosperity of the middle class
BY NOMI PRINS
Nomi Prins is the author of "Other People's Money: The Corporate Mugging
of America," and senior fellow at the public policy center Demos.
October 25, 2004
I'm no baseball expert. But, I'm pretty sure you can't knock the ball
out of the park if you don't swing the bat. So, the fact that we've
reached the bottom of the ninth in this presidential election with no
mention of the continuous rampage of corporate scandals has me crying
foul.
Neither corporate crimes nor remedies have been featured in George W.
Bush's or John Kerry's rhetoric; even as more corruption is exposed
daily. It's the living-in-a-plastic-bubble approach to campaigning.
Despite a steady flow of fraud disclosures, bankruptcies, downgrades and
resultant lay-offs and nest-egg losses, neither man has dared whisper
the word Enron. We barely heard the word Halliburton until John Edwards
brought it up in the vice-presidential debates. Cheney, who owns more
than 433,000 Halliburton options, waved off accusations that his
connections had landed Halliburton an 800-percent increase in government
contracts (paid for with our tax dollars). Old news, he'd have us
believe.
Is it possible they think we've moved past Enron's cooked books?
WorldCom's implosion? Fannie Mae investigations? Do they really not get
it?
Or is it that they don't want to take any responsibility for fixing it?
Because it's not old news. The cheap money that banks funneled into a
deregulated corporate America lingers like a bad smell. While Bush
painted his rosy picture of the economy, AT&T announced that it will
slash 12,000 jobs this year. Bank of America is cutting 17,000 jobs. GM
got its credit rating slashed to almost junk the day it announced 12,000
layoffs in Europe. Days later, the car giant hit our shores, announcing
900 job cuts, to start.
Conflicts of interest abound in a financial services industry that both
creates and sells the same stuff. Last year's $1.4-billion Wall Street
settlement with 10 banks was supposed to reform the business. Since then
we've seen mutual fund scandals galore, and this month Attorney General
Eliot Spitzer opened fire on the world's largest insurance broker, Marsh
& McLennan. It was the managers' fault that their stock got pummeled and
their employee pension plans shriveled by 50 percent, shades of Enron in
our own backyard.
Bad news keeps coming, but Bush and Kerry refuse to examine the systemic
problems, or the high correlation of corporate malfeasance to job
losses. Instead, we hear about tax plans for individuals. Bush insists
his tax cuts have helped the middle class. Kerry wants to roll back cuts
for the wealthiest 2 percent of the country. That's great, but the
middle class is 98 percent of the country? Not exactly a classic
definition of "middle." Ralph Nader seems to be the only presidential
candidate aware of ongoing corporate scandals and their consequences for
the republic.
The two main candidates aren't discussing re-regulating corporate
behavior, or re-invigorating regulatory bodies funded by our tax dollars
to monitor it. But that doesn't mean they're ignoring corporations.
On corporate taxes, they agree: Cut them. Forget the fact that the
Government Accountability Office, a non-partisan Washington entity, said
60 percent of U.S. companies paid no federal taxes during the stock
market boom of the 1990s. Enron even got a tax rebate of $381 million;
former employees and shareholders did not.
Corporate America was rewarded for gross misconduct with $170 billion of
fresh tax breaks this May, passed 92-5 by the Senate. It got another
$136-billion tax break on Oct. 11. Kerry, out campaigning, missed both
votes, but promised to reduce corporate taxes another 5 percent if
elected.
In order to find a solution to runaway fraud and economic ruin, we need
to identify the source of the problem. Then deal with it. That's the job
of a leader.
We could hack a chunk off the deficit by increasing, not decreasing,
corporate taxes. Or by invoking a flat tax on corporate profit that
actually adds to the federal government's bottom line. The Securities
and Exchange Commission should reinforce existing regulations
pre-emptively, not after the fact or an Eliot Spitzer fraud
investigation.
Any administration should recognize that future economic stability is
predicated on restoring some integrity to the financial and corporate
system. Where's that "Pottery Barn" rule now? Break the regulations, own
the mess, fix the problem. We need to hold corporate America accountable
to greater America - that's helping the middle class.
Copyright C 2004, Newsday, Inc. <http://www.newsday.com>
<http://www.newsday.com>
--
Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901
