BY JACK CRISS
DBJ Executive Editor

Politicians on both sides of the aisle are wailing about giant corporations right now. It’s quite fashionable. Of course, because of the Enron and WorldCom fiascos, it’s bordering on hysteria and nutty hyperbole.
There has always been an undeniable bias against big business in this country. From the incredibly burdensome regulations placed on it by the government (such as anti-trust) to the outlandish caricatures of it promulgated by Hollywood (“Wall Street” or any movie that needs a villain), big business is always the bad guy. Never mind the fact that government exists because it is financed by taxation (the majority of which comes from corporations), or that Joe Public goes to the movies with money earned at a business. The very notion of commerce is deemed dirty.
Religion often knocked profit makers (remember the one about the camel and the eye of a needle?). Intellectuals, influenced by Marx and John Maynard Keynes, at best regard business as a necessary evil to be reigned in by regulation. The general public is influenced by such opinion, as well. Sadly, even a lot of business men and women succumb to such thinking, seeing themselves as just making a buck in a dog-eat-dog world.
Overlooked by all the negative hoopla about capitalism in the media right now is the fact that, for every Enron or WorldCom, there are no doubt thousands of honest, highly productive and highly profitable businesses in America today. Moreover, the market flushes out the bad guys just fine, even without the threatening hand of the federal government.
For instance, WorldCom didn’t fall because of government prosecution, but because their “strategy” of leveraging an irrationally high stock price to secure acquisitions of other companies created a Ponzi scheme that was doomed to fail. Stock analysts pretending that the scheme was legitimate allowed WorldCom’s charade to go on as long as it did.
A few honest analysts did see through the smoke, people who did the research and used logic, not wishes, to make a proper judgment. Those who didn’t—-investors who wanted to jump on the WorldCom bandwagon because it was hot—should pay the price for their error in judgment.
Here again, though, the U.S. government—-whose purpose now is to protect everybody from everything or else—will go after corporate CEOs presumed to be guilty until proven innocent while seeking vengeance in the name of investors who evidently shouldn’t be liable for their own mistakes. And of course, with new, sweeping legislation in place, all corporations will pay their “penance” in the form of double taxation on profits.
On top of this, Congress is expecting businesses to operate under rigorous accounting standards that it has never had to go by, and never will. Ask a bureaucrat how much debt the federal government owes. The current number thrown around today is $3.5 trillion. According to economist Walter Williams, you can add to that number the intragovernmental debt and the number soars to $6 trillion. That’s an amount that makes Enron and WorldCom look like Romper Room. No business could last a moment in the market with that type of debt.
But there’s more: According to the Dallas-based National Center for Policy Analysis, the accumulative federal obligations to all people who have earned Social Security and Medicare benefits are $12.9 trillion and $16.9 trillion, respectively. Put these figures together with the intragovernmental debt and the federal debt becomes an astronomical $35 TRILLION, approximately $120,000 for every man, woman and child in the country. To try and pay this, no doubt the feds will inflate the currency. Where’s the outrage? Where’s the Hollywood blockbuster?
The Securities and Exchange Commission didn’t lift one finger, but the market extracted high penalties on WorldCom and Enron. The “invisible hand” can handle deception—who, or what, can handle taxpayer-funded demagoguery?
I’m not an investor, but I do believe in the self-correcting mechanisms—and the morality—of the marketplace. I found it pretty sickening to read quotes from WorldCom investors after the news broke that their “faith in the market” had been shaken and that “the government should do something.”
Those same people who saw fit to pour money into investing in WorldCom stock when it was considered the hot pick—-obviously believing VERY strongly in the market at the time—-suddenly were whining for Uncle Sam to save them from their own bad choices and to regulate those who were more diversified and more deliberate in their stock choices.
Ominously, the new accounting reform plans now sailing through Congress will ultimately lead to control of business information. By centralizing how accounting should be done, the government is attempting to control the quality and content of information that markets need to perform properly. An example of this is anti-trust regulation, where the Federal Trade Commission is now prosecuting doctors who talk to one another about the fees they want to charge insurance companies on the grounds that the “public interest” will be harmed.
The road is being paved for the government to come in and dictate to corporate America how their business is to be run. The climate is in place—-in the universities, in the media, in the churches and in the town square—for this to happen. The reasons for this climate are beyond the scope of this article. But it’s time that those of us who know the truth about business speak it and not be ashamed of it: the activity of commerce is noble, good and benefits all. The more money you make, the more power to you. Especially if you get to keep it. DBJ