ENRON SCANDAL

I wasn't going to write anything about the Enron scandal, given the saturation coverage it's receiving. 

Even the self-proclaimed spokesman for the "working class," Bill O'Reilly, seems to be following through on his pledge to devote a lot of time to the issue (maybe he'll even wind up spending more airtime on Enron than on the alleged financial irregularities O'Reilly maintains are rife in Jesse Jackson's non-profit organizations!).

I was prompted to write about Enron, however, by two things: an outrageous statement by Treasury Secretary Paul O'Neill, and, by how shallow the corporate-owned media's analysis is when they profess to be discussing the broader and deeper implications of this scandal.

Treasury Secretary Paul O'Neill

O'Neill said yesterday that

Companies come and go.

It's part of the genius of capitalism.

Senator Joseph Lieberman, Democrat from Connecticut, called the comment "cold-blooded."  And I immediately thought, what else could one expect from O'Neill, a kind-hearted guy who wants to drastically slash Social Security and Medicare, and who opposes a British plan to increase the amount of aid given by the rich nations to global antipoverty efforts. 

If O'Neill doesn't care about the elderly and the Third World poor, he certainly wouldn't be overly concerned that thousands of American workers had their life savings wiped out by the Enron collapse.

Indeed, O'Neill practically spelled out his lack of concern in a further comment:

[P]eople get to make good decisions or bad decisions. And they get to pay the consequences or to enjoy the fruits of their decisions. That's the way the system works.

Apparently, O'Neill believes it's a bad decision to not be able to read the minds of Enron executives and know they were lying about the company's economic condition.

A "Deeper" Analysis by the Corporate Media

In an editorial, the New York Times correctly points out that 

The Enron debacle is exceptional only in its scale. Other former Wall Street favorites have engaged in creative accounting to pump up their stock prices. Lucent , Sunbeam, Waste Management , Xerox and Cendant are only some of the more notorious cases of companies forced to restate previously reported earnings, causing their stock prices to crater. People lost billions of dollars, misled by phony numbers ratified by the accountants.

The newspaper then seeks to warn of deeper implications of the current scandal:

The public's trust in the integrity of markets, and in the reliability of companies' disclosed financial data, has been one of America's competitive advantages since the adoption of its security laws in the 1930's... A majority of Americans are now invested in the stock market, but they will not long participate in a game they know to be rigged against them.

The way the New York Times looks at it, the "game" would not be rigged against the majority of Americans were scandals like Enron to be prevented in the future.

I beg to differ.

The game would be rigged against the majority of Americans even were every executive in every company to obey every "rule" as would an Eagle scout.

The wealthy set up the financial structures, and they don't set them up in a manner that will cause themselves to become poorer relative to everyone else.  Quite the contrary.

The wealthy became wealthy by devoting their time, intelligence and resources to amassing wealth.  In a game where they make the rules, the rules will favor them, and indeed will serve to enhance their position -- that is, increase their wealth relative to others.

This is only common sense, and in accordance with human nature.  I'll give two quick examples, first a micro one, then a macro one.

Micro: The wealthy want to avoid paying taxes, and the rules those like Paul "Let Them Eat Cake" O'Neill set up are designed to let them do exactly that.  For example, O'Neill recently approved a phony agreement with the Cayman Islands, an off-shore tax haven used to avoid federal and state taxes, that allows the wealthy U.S. tax evaders to withdraw their money and deposit it elsewhere before an ostensible crackdown on them will begin!

Macro: In a system designed and kept in force for a long period of time by intelligent people, one would expect that the results are those that the designers intended.  Since income inequality in this country has continued to increase throughout the 1980's and the 1990's, one must assume that's the intent of those who make the rules of this "game." [more examples of the transfer of wealth to the rich from everyone else]

*  *  *

No matter what the majority of Americans do under the current rules of the game, no matter how accurate the financial statements the New York Times would be relieved for them to receive, the game will remain rigged against them, and they will lose ground against the wealthy, garnering a smaller and smaller share of the economic pie.

The amassing of huge profits by the Enron executives at the expense of the workers and shareholders of the corporation is not an instance where the overall result -- increased concentration of wealth at the expense of the middle and working classes -- is in error.  That result is the goal of the game's rules. 

The Enron scandal is merely an instance where some wealthy executives got so greedy that they weren't content with the more-than-fair share of the country's wealth they would amass under the "rules."  They broke these "rules," so now the pundits are all atwitter.