Calls For Democratic Controls On The Criminal Behavior Of Business Interests
Levinson, Mark
"CHILDREN AND economists," Robert Lekachman once said, "may think that the men at the head of our great corporations spend their time thinking about new ways to please the customers or...
...Milken was the target of a ninety-eight-count criminal indictment and a massive civil case filed by the SEC...
...nearly a thousand companies have had to restate misleading reports in the last five years...
...As I write in the summer of 2002, there are ten House and Senate investigations of Enron...
...The charges against him included insider trading, price manipulation, falsifying records, filing false reports, racketeering, and defrauding customers...
...Corporations have accounted for nearly 90 percent of all soft money contributions to the parties since 1995, according to the Center for Responsive Politics...
...In 1995, the Gingrich conservatives took over Congress and acted as if the scandals of the 1980s had never happened...
...This money has not been wasted...
...It did its work...
...It's not business," he said "that needs more regulation and limitation— but government itself...
...And it was Bill Clinton who signed the Financial Services Modernization Act of 1999, the most sweeping banking deregulation bill in American history...
...Codes of conduct sprouted like weeds...
...Reading about them today, it seems obvious that this is what happens when deregulation goes too far...
...Enforcement budgets were slashed...
...As for economists, well, apparently many of them don't read newspapers...
...Companies would enforce their codes of conduct...
...We'll hire private monitors to enforce our codes of conduct...
...Gingrich called regulation one of the "great enemies that killed the entrepreneurial spirit...
...Sometimes the deception gets out of hand—as it did in the 1920s when business excesses led to the Great Depression in the 1930s—and then government steps in to regulate...
...He described those who "live by profit" as men who have "an interest to deceive and even to oppress the public...
...The aim of the movement to bring corporate power under political control has a name: democracy...
...The centerpiece of Gingrich's Contract With America was the Private Securities and Litigation Reform Act...
...Corporate influence in both parties means that for the last several decades corporations have written the rules by which they are "regulated," or, in fact, not regulated...
...Their academics "proved" again and again that all that needs to be done to create heaven on earth is for the government to get out of the way...
...We will hire PriceWaterhouse and Arthur Andersen to make sure we enforce our code of conduct against sweatshops...
...It had great policies (on paper) on human rights, climate change, and anti-corruption...
...COMMENTS & OPINIONS The corporate funded, right-wing think tanks played a particularly important role...
...The crimes back then were not petty larcenies, although Milken's hired guns, along with people who have a heavy ideological investment in the "greed is good" philosophy have done all they can to make us think otherwise.* In retrospect, the scandals of the 1980s appear as warnings of worse to come...
...Its CEO gave speeches at ethics conferences and put together a statement of values emphasizing "communications, respect, and integrity...
...Many who should have known better went along, giving legitimacy to the charade...
...Milken now runs a think tank, publishes an economic journal, and is a hero to many on the right...
...And we will hire the best...
...The academics provided cover for the legislators, who didn't want to believe they were doing what they did simply because they were being paid to do it...
...Unrestrained economic power is the enemy of a good society...
...Passed in 1995 over Clinton's veto, the bill shielded outside accountants and law firms from liability for false corporate reporting and made it more difficult for shareholders to bring suit against fraudulent reporting...
...The markets can police themselves...
...Enron, for example, won a spot for three years on the list of the hundred best companies to work for in America...
...Enron opposed price caps for soaring electricity prices in California, informed Vice President Dick Cheney of its position—and he also opposed the price caps...
...I mean real professionals who know about monitoring...
...When asked if there were any federal regulations he would choose to keep, Majority Whip Tom DeLay said, "Not that I can think of...
...Both major political parties have received dramatic increases in contributions from big companies...
...The president appointed to the Federal Energy Regulatory Commission people specifically requested by Enron...
...The company's stock was included in many social-investing funds...
...and • President Bush reversed the Clinton administration's crackdown on offshore tax havens...
...In return for pleading guilty to six relatively minor securities violations, he was fined six hundred million dollars, sentenced to prison for a decade (he served twenty-two months), and barred from the securities industry for life...
...Immediately upon taking office, Reagan created the Presidential Task Force on Regulatory Relief, chaired by Vice President George Bush...
...A flood of corporate misstatements has followed...
...Concerned about sweatshops...
...Last summer, in the midst of one of the largest business scandals in seventy years, Alan Blinder, an economist at Princeton University, a former economic adviser to President Bill Clinton, and vice chairman of the Federal Reserve Board, told the New York Times, "If you go around asking academic economists, 'Do you think we should re-regulate the airlines or trucking or any other deregulated industry?' you would get no votes...
...Milken never went to trial on the many charges against him...
...Then some twenty years ago, corporations launched an attack to limit the power of government...
...After the revelations about Enron, Arthur Andersen, Global Crossing, Tyco, Dynegy, Adelphia, and WorldCom, most children no longer believe this...
...Business schools endowed chairs in business ethics...
...As a result, we are confronted with the wholesale, organized corruption of the markets that, so we have been repeatedly assured by conservative ideologues, are the glories of democratic capitalism...
...Cheney personally intervened...
...While deregulation was freeing companies from legal constraints, companies were covering themselves with ethical gloss...
...Funds promising to invest in ethical corporations attracted billions of dollars...
...Major corporations created ethics officers...
...SELF-REGULATION was the order of the day...
...No need for laws or government bureaucrats...
...The Bush administration, the business community, and, unfortunately, many Democrats, see the current wave of corporate malfeasance as a problem that can be fixed by tougher enforcement of existing laws and new penalties for corporate lawlessness...
...Enron fooled many people...
...The White House assisted Enron in its negotiations with the government of India regarding the sale of a $2.9 billion power plant...
...Even though many of the more extreme planks of the Contract with America were not enacted, the antiregulatory environment created by this relentless assault led us to the culture of corporate rot that has now come to light...
...We have witnessed not just a financial scandal but a political scandal that exposes the consequences of unchecked corporate power...
...The turning point was the election of Ronald Reagan...
...But Enron was not the problem...
...BUT THE PROBLEM goes much deeper than that...
...In 1987, the splendidly named Competitive Equality Banking Act, passed by a Democratic Congress and signed by President Reagan, contributed to the savings and loan debacle...
...Although the reasons for Enron's financial failure (the accounting gimmicks, the insider greed, the outright fraud, the mismanagement) have become evident, there is only scant information available about Enron's extraordinary rise, which appears to have been accomplished DISSENT / Fall 2002 n I 7 COMMENTS & OPINIONS largely by buying political influence...
...For almost fifty years the regulations put in place by the New Deal— the Securities and Exchange Commission (SEC) reviewed company accounts, the Glass-Steagall Act separated investment houses from commercial banks, the Federal Trade Commission and the Justice Department limited mergers and monopolies, strong unions protected workers—were effective in preventing widespread business scandals and 16 n DISSENT / Fall 2002 financial corruption...
...Adam Smith was a bit more sensible...
...It received environmental awards...
...California representative Henry Waxman has identified a number of examples of possibly improper influence by Enron: • The White House Energy Plan reflects seven of eight recommendations made by Enron...
...It exacerbates inequality, narrows political debate, and leads to cynicism and despair...
...MARK LEVINSON is chief economist at the Union of Needletrades Industrial and Textile Employees...
...The corporate responsibility movement concealed the truth about corporate power and provided a convenient rationale for not doing anything about it...
...The political significance of the business scandals 18 n DISSENT / Fall 2002 COMMENTS & OPINIONS lies not in how many seats the Democrats capture in the House this November (important as that is), but rather, whether this scandal will drive people to build unions and other political organizations strong enough to be a counterweight to corporate power...
...Don't trust the companies...
...It was, of course, all a fraud...
...By the end of the decade the deregulated savings and loan industry was bust (the cost to taxpayers: several hundred billion dollars), and Ivan Boesky and Michael Milken were in jail for their part in a massive insider-trading scandal...
...As a result, Enron was able to shield the transactions of more than eight hundred offshore subsidiaries—and did not pay taxes on their income...
...But the corporations, investment houses, banks and law and accounting firms continued supporting—lavishly supporting— academics and politicians who would toe the deregulation line...
...DISSENT / Fall 2002 n 19...
...OK," the companies responded...
...The billions of dollars that corporations spent for political contributions, right-wing think tanks, lobbyists, and television advertising had an impact...
...None are focusing on how Enron was able to obtain its extensive political influence...
...Its goal was to remove government oversight of business practices and reduce or eliminate the accountability of corporations and their officers to the public...
...CHILDREN AND economists," Robert Lekachman once said, "may think that the men at the head of our great corporations spend their time thinking about new ways to please the customers or improve the efficiency of their factories and offices...
Vol. 49 • September 2002 • No. 4
