It's just one day's reporting, mind you, but even the Wall Street Journal is finding it hard to hold a charitable view of corporate America these days. Here's just a sampling of Tuesday's stories:
- An update on the Enron-Arthur Andersen trial.
- Tyco's CEO resigns over allegations of sales tax fraud.
- An El Paso energy executive was found dead of a gunshot wound to the head.
- Microsoft settled claims that it lied about its earnings.
TRENDING: St. Patrick's role on the 'external hard drive'
Commenting on the Dow's 200-point drop that day, the Journal credited "a succession of corporate scandals related to corporate accounting and alleged bad behavior ..." (Stocks Slump in Late-Day Selloff on round of ugly corporate news, WSJ, A1, June 4, 2002).
It's about time. I remember the shocked letters I received three years ago after suggesting that economic reports weren't all they were cooked up to be, before the stock market boom went bust:
All right, so the administration routinely lies about sex, violence, abortion and the FBI. We know that on the really important thing we in America all agree about – money – the government would never lie, right?
– "Natural born liars," WND, March 4, 1999
"You can't be serious!" readers wrote. "You don't really think they'd lie about financial matters, do you?" Well, yes, actually I do. I think when people are earning oodles of money because they have the good fortune to be in charge during an economic upswing, they begin to believe their own hype about creating the good times. When the tide turns, they will do anything – and I do mean anything – to hold onto the money and power. The less capable they are, the more dangerous they are.
Lying goes to the heart of the problem. It's a way of gaining unwarranted advantage over another; lenders, shareholders, competitors, consumers, you and me. Lying is today's all-purpose answer. Bad earnings? Lie about them. Big trading losses? Lie about them. We'll patch it up later and no one will be the wiser. You tell 'em, Enron.
As the Journal has surmised, the lying problem is larger than simply the affected individuals and companies. All of society suffers when liars are put in positions of responsibility. Lying is a classic slippery slope. Soon, competitors are drawn in as well. When Enron began to lie about its profits, other energy companies come under pressure to duplicate their financial results, which most people believed were real. Then the auditors were drawn in – Honest Arthur didn't want to lose that lucrative client. Today we all know that brilliant management strategy and dedicated employees couldn't duplicate Enron's results. They weren't real.
Lest we believe the answer is more government control, let's remember that lying entered the mainstream when the Democratic party got down under the desk in the Oval Office with Monica. Shortly thereafter, the U.S. Senate told the House of Representatives that no amount of evidence would convict the president, and promptly voted not to impeach Bill Clinton for lying under oath to the nation in a court of law. Solidarity, the Democratic party surmised, was more important than justice. I just hope those senators had lots of their pension money in Enron, too.
We have no one to blame but ourselves for the proliferation of liars in our lives. During the 1990s, most of us were too busy watching our brokerage balance bubble upward to care that lying had become an untreated epidemic in both state and corporate governance. Today, our brokerage statements don't seem as interesting – we have plenty of time to reconsider the wisdom of buying promises from firms run by liars.
And that is the bottom line: A stock certificate is simply a corporate promise issued to us in return for hard-earned cash we expended a part of our lives to acquire. Like any other promise, it's as good as the people behind it. Today, nobody knows who the liars are, or who's being honest. Investment in America is on hold until we find out. That's what the Journal is so worried about.
It could be a long wait. There's little incentive for senior executives to stop lying. The company pays their fines. Their retirement funds remain intact. They get fat severances. No one goes to jail. And if they do go, lying seems to look good on their resume. Long after you and I retire on a nest egg worth five cents on the dollar, they'll have the other ninety-five cents in their pocket.
Is there a solution? "Thou shalt not steal" posted in our public schools and courthouses didn't pass constitutional muster. Maybe the ACLU has a better plan?