Re: [A-List] Destructive creation:US economy's internals

[Rob Schaap <rschaap@xxxxxxxxxxxxxx>]

G'day again,

Good spincraft here - making the best of a bad lot is the right PR
strategy for the job at hand.  It's just that it doesn't quite fit
together as neatly as its final casual affirmation would have us think.

Waddyathink?

Cheers,
Rob.

http://www.washingtonpost.com/wp-dyn/articles/A22567-2002Jun9.html
A Worm at the Core of Capitalism

                         By Sebastian Mallaby
                         Monday, June 10, 2002; Page A21

                         In the 2000 campaign, Al Gore tried to spice
                         up his roadshow by lashing out against big
                         business. He was laughed off the stage
                         because the 1990s boom had made populist
                         rants sound hollow. At about the same time,
                         say 1999-2001, anti-globalization protests
                         vilified big business too. The movement
                         petered out because its leaders were so
                         muddled.

                         Now, however, things have changed. Enron
                         has created a natural moment for a smart
                         assault on capitalist excess. The wonder is
                         that political leaders and social activists
                         alike do not seem to have seized it.

                         The assault starts with the myth that
                         Internet-era plutocrats were nicer than their
                         predecessors. In the popular imagination, the
                         typical billionaire of the 1990s was a
                         pony-tailed geek on a mountain bike, not a
                         top-hatted baron of the Gilded Age or a
                         besuited 1980s Wall Streeter. Kevin
                         Phillips's new history of the rich recalls the
                         excesses of past plutocrats: They said things
like "greed is good" (Ivan Boesky) and "Only the little people pay
taxes" (Leona Helmsley); they reserved two seats on the Concorde to fly
a birthday cake to Paris (Mrs. John Gutfreund). In contrast, 1990s
wealth was informal and discreet. It was tinged with environmentalism
and social consciousness. It was virtuous and honest.

                         This stereotype overlooked the philanthropy of
past barons -- the endowments created by Carnegie and Rockefeller and,
more recently, by popular villains such as Michael Milken. But it also
painted the 1990s in too soft a light. Bill Gates has endowed a terrific
charity, but his appetite for monopoly profit matches that of the oil
and railroad trusts, circa 1900. Larry Ellison, the second richest
cyberbaron, collects yachts and sports cars and wives; he is as modest
as Madonna. The past few months have given us Ken Lay, the Enron chief
who urged employees to buy doomed company stock while he was dumping it.
They have given us John Rigas, the founder of Adelphia, who helped
himself to billions of shareholders' cash to buy goodies for his family.
And they have given us Dennis Kozlowski, the departed boss of Tyco, who
seems to have used company funds to buy himself an $18 million apartment
and $13 million worth of paintings.

                         But the new attack on business is not just
about plutocratic greed. It is about the core principles of capitalism.
Our system is supposed to reward people for producing stuff that others
want. Enron and Adelphia and Tyco poison this system of meritocratic
reward: Their bosses did well not because they served consumer needs,
but because accountants lied about their records. When firms cheat like
this, capitalism forfeits both efficiency and morality.

                         What's more, the corporate culture of cheating
extends beyond accounting. Last week a study in the Journal of the
American Medical Association found that published statistics on new
drugs are often little better than Enron's accounting. In one egregious
example, first reported by Susan Okie in The Post last year, Pharmacia
Corp. funded a study to show that a medicine called Celebrex works
better than cheap alternatives such as ibuprofen. The study collected 12
months of data, which suggested no Celebrex advantage. So the authors
selectively published the first six months of results, which purported
to show that Celebrex had fewer side effects. In 2001 alone, this Arthur
Andersen-type trick caused patients to spend $3 billion unnecessarily.

                         The pattern here should be politically
explosive. A firm's stock price is supposed to go up when it has
produced something people want, not because its accounts are fraudulent.
A drug firm is supposed to reap $3 billion when it makes something
wonderful, not when it rigs scientific data.  Yet cheating goes on far
too much. Last week a survey found that in the past five years 993
companies have been forced to restate their results after
misrepresenting them the first time around.  A week earlier another
study showed that two-thirds of the "new" drugs granted patents between
1989 and 2000 were old drugs with a minor twist and a major marketing budget.

                         Put this together with other corporate scams,
and you've got a campaign message. Companies are fleeing to offshore
havens, forcing you to pay more tax. They lobby for useless weapons, farm
subsidies and other corporate welfare, so that your tax dollars get
wasted. And look at Enron and Adelphia and those pharmaceutical firms:
They are wrecking your retirement funds with accounting tricks,
jeopardizing your job security by siphoning cash out of your firm and
bankrupting your grandma with sky-high drug prices.

                         Forget the dumb attacks on globalization and
free markets. The real injustice is that firms are rewarded for lies and
lobbying clout, rather than for producing honest goods and services. The
scandal isn't capitalism, in other words. It's that capitalism has been corrupted.

© 2002 The Washington Post Company