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The Unbearable Goodness of Being Greedy

By Shamarukh Mohiuddin with Kate Cloud and Nikhil Aziz

 

Treasury Secretary Paul O’ Neill’s confidence in the “genius” of capitalism, even as corporate scandals continue to unravel might be ironic, but it is certainly not surprising. The defense of unfettered capitalism has been a trademark of the contemporary U.S. conservatism ever since the political Right wedded moral traditionalism with libertarian free market principles.  Now, in the wake of a corporate crisis that has global implications, the Right stands ready once again to justify a free-market system that has sustained it for years.

Still, some right-wing critics are unsatisfied with the way the Bush Administration has been defending capitalism. Columnist Donald Lambro in the conservative Washington Times complains that, “this is the time when the Bush administration should be, like Ronald Reagan, defending capitalism and expressing confidence in American businesses and the economy. Instead, it seems to be heading for the tall grass, afraid yet another financial scandal will break.” (Washington Times, 07/01/02). In fact, questionable financial and corporate behavior continues to leak out like the contents of Pandora’s Box.

Telecom giant Qwest Communications recently admitted to overstating revenues by over $1bn for the last three years. Frequent additions to the list of corporate malefactors, since Enron, makes one wonder how a “few bad apples” could be an apt description of the current scenario in corporate America. It is notable that even some doyens of big business leadership such as Pete Peterson, Nixon’s Secretary of Commerce and now chairman of the Blackstone Group, have started smelling a “rotting orchard”(interview with Jim Lehrer on PBS NewsHour, 07/12/02).

Such candor, though, is rare on the Right and denial is a consistent theme in the Right’s reactions to the corporate scandals that we have seen so far.  Even as stocks plunge and workers are being laid off, conservative commentators vigorously try to minimize the economic effects of the scandals. Their message: because productivity is high and inflation low, the economy is doing just great!

Another group of rightists is less myopic. Having seen ominous clouds in the distance, they are blaming economic problems on everything from the falling dollar to Osama Bin Laden.  Even Alan Greenspan is not spared.  Commentator Bruce Bartlett contends that, “It is worth remembering that the economy's problems and those of the stock market resulted from the same factor: an excessively tight monetary policy by the Federal Reserve” (Washington Times, 07/01/02).

Those on the Right who agree that these scandals must mean that business ethics are seriously lacking, are scrambling to develop an incredible list of scapegoats.  Political analyst Ann Coulter, in a column on the conservative website townhall.com, points an accusing finger at former President Clinton, who she says has “bequeathed America a culture of criminality and rationalization by the powerful.” Not only does Coulter ignore the Bush administration’s ties to Enron, but she also seems to insinuate that Bill Clinton invented corporate corruption.  It is as if CEOs are impressionable three-year-olds who should be protected from dishonest behavior, lest they should start imitating it.    (www.townhall.com, 07/26/02). In the conservative WORLD magazine (07/20/02), Timothy Lamer blames college professors for offering a “skewed view of business priorities.”

Some rightists even claim that government regulations are responsible for the scandals. After all, if corporate taxes were low and federal regulations were non-existent, CEOs would not be forced to cheat. For these folks the solution, therefore, lies in deregulation. Several conservatives have expressed outrage at Alan Greenspan’s statement that “infectious greed” grips much of American business. Although Greenspan now appears to be a staunch supporter of government regulations, as long ago as 1963, he wrote an essay about the “perils of regulation”(“The Assault on Integrity”, The Objectivist Newsletter, 1963). In the same essay he called the free market system a “superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear.” (Bill Goldstein, New York Times, 07/21/02). Did Greenspan just change his point of view? A closer look may show that this is not necessarily the case. Times columnist Goldstein reminds us that Greenspan’s had warned a colleague  “to distinguish carefully between what he believes personally and how he acts as chairman of the Fed.”

In spite of the government’s empty rhetoric that strict regulations are needed, Right Wing commentators constantly assert that the market is able to self-regulate. The Right’s market fundamentalist prescription, per columnist Steve Chapman, is for government to “step aside” and let the market run its course (www.townhall.com, 07/11/02). James L. Gattuso of the conservative Washington think tank, Competitive Enterprise Institute, has an equally ingenious solution. He agrees that accounting standards need tightening, but “this can and should be done,” he says, “through private, rather than political, regulatory bodies.” (www.cei.org, 07/28/02).  The Heritage Foundation offers a similar solution in its 07/12/02 issue of the Backgrounder.

And what about President Bush’s resolve to punish those “corporate criminals.”  Bush, perhaps, has hopes that a discourse on morality (while posing in front of Corporate Responsibility logos) would serve the dual purpose of spotlighting those “bad apples” and helping the public forget about his Harken boardroom dealings. 

Throughout right-wing commentary, one topic is seldom touched upon:  the fate of ordinary corporate stakeholders.  Every time a scandal breaks, hundreds upon thousands of ordinary workers are laid off. It is as if these workers are being treated as collateral damage while the market runs its course. Collateral damage will probably include millions more who would likely suffer if Social Security funds were put into the stock market.  The conservatives’ aggressive attempt to privatize Social Security, just before the corporate scandals, has now subsided to a whisper, at least temporarily.  Still, there are many who continue to adhere to their privatization agenda.

Not only are ordinary workers being persuaded to speculate with their savings, but also, wealthy corporations are being encouraged to generate six figure savings from tax loopholes. For instance, an essay in the May 16, 2002, issue of the Wall Street Journal contends that corporations should feel justified in relocating to offshore tax havens as a response to high corporate taxes in the United States. The essay goes even further to claim that it is an American corporation’s patriotic duty to relocate overseas, since the U.S. government will then be compelled to reduce taxes. While patriotism has always been marketable, market fundamentalism is now being touted as patriotic. The push for privatization and the call for reduction of corporate taxes, even after the corporate scandals, exposes the Right’s blatant preference for a system of economic inequality.

Conservative commentators in other countries, not surprisingly, are also rushing to defend the free market system. George Trefgarne, economics editor of London’s Telegraph is quick to point out that the market itself should not be scrutinized.  In a column published in the Sydney Morning Herald he alleges, “No doubt some academic pundits and left-wing rabble rousers, playing on fears that the system doesn’t work, will take advantage of the situation and question the very values and institutions upon which the world economic system rests.” (Sydney Morning Herald, 07/01/02).  

One of those values – greed – is defended by the Right as both unavoidable and useful. Chapman argues in his column that capitalism functions to “channel greed into activities that provide broad benefits.” Trefgarne supports this argument when he posits that since markets are based on human nature, it is only inevitable that they will “fall victim to humors and passions, such as greed and fear.” He says that the very fact of  the corporate scandals  taking place shows that “rather than the markets failing, they are working”.  Like many supporters of unfettered capitalism he fails to mention for whom they are working.

The current Administration’s close ties to Enron, Halliburton and Arthur Andersen, demonstrate the links between economic and political actors. While many of our leading politicians, regardless of party affiliation, are now trying to distance themselves from corporate fraud, they cannot erase their long history as  both beneficiaries and benefactors of the fallen corporations. 

Arthur Anderson’s promotional video from 1996 shows Vice President Dick Cheney (then CEO of Halliburton) applauding the accounting firm for providing advice “over and above the just sort of normal by-the-book auditing arrangement.” (www.commondreams.org/headlines02/0710-01.htm). And not so long ago, President George W. Bush, a long time friend of Enron’s Kenneth “Kenny Boy” Lay, was the head cheerleader for the superiority of US business leaders.  While campaigning in 2000 he said corporate CEOs were “revolutionizing how businesses conduct their business.” (C-Span, 01/04/01). In light of current events, this statement rings devastatingly true.

Even though Enron was just the beginning, administration officials are insisting that  “no new laws are needed to reform corporate America, only enforcement of existing laws”, as pointed out economist Paul Krugman. (Op-ed, New York Times, 08/13/02). Accordingly, the Bush Administration championed a bill that allowed minimal accounting reforms after trying to block it. When the bill was passed, it “began issuing ‘guidance’ to federal prosecutors that will undermine the law's intent on whistle-blower protection, document shredding and more.” Bush and Co., as Krugman observes, “just don’t get it.”

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Shamarukh Mohiuddin was a PRA intern in the summer of 2002