AUSTIN, Texas -- It's time to connect the dots. If you think the
government is having a connection problem on the national security side, you
should take a look at the starburst of dots on the economic side for a
really stunning scandal. When you start to connect the dots on the business
side, you will notice that we're being stolen blind.
One of the best interviews I've read in a long time is in the
current issue of The Texas Observer with Bill Black, a name that will bring
back fond memories for those who followed the S&L scandals closely.
Black is now an assistant professor of public affairs at the LBJ
School of Public Affairs at the University of Texas. He is a lawyer, an
economist and former litigation director of the Federal Home Loan Bank
Board -- which is to say, the man who went after the S&L crooks. After he
left government, he got a Ph.D. in criminology. His greatest claim to fame
is that Charles Keating, that noted thief, once wrote a memo to his top
lobbyist that said: "Highest priority -- Get Black. GOOD GRIEF -- If you
can't get (Jim) Wright and Congress to get Black -- kill him dead -- you
ought to retire."
So Black's pretty much the perfect guy to analyze the
Much-Bigger-Than-Enron mess into which the financial industry has now got
itself.
In case you hadn't noticed, a mentality of crookedness has
pretty much taken over many of the advanced reaches of capitalism. Or as The
Wall Street Journal noted almost parenthetically on its front page last
Thursday, "The failures of Wall Street's compliance efforts are coming under
intense scrutiny -- part of a growing awareness of how deeply
flawed the U.S. financial markets really are. (Emphasis added)
The watchdogs charged with keeping the financial world honest have all lost
credibility themselves: outside auditors who bend the rules to please
corporate clients, analysts who shape stock recommendations to woo
investment-banking customers and government regulators too timid or
overwhelmed to keep track of the frenzy."
The Journal is entitled to note this really rather major story
parenthetically, since the paper has faithfully covered and uncovered much
of the story itself. But where are the rest of the media? Of course, the
latest developments in the Chandra Levy case are more gripping, but I have
yet to see a headline "connecting the dots" between Enron, Global Crossing,
Merrill Lynch, Arthur Andersen, etc. The Texas Observer gets it: Where's the
rest of the media?
What Bill Black calls "control fraud" is when the people who
control the organization -- Ken Lay or whoever -- either set out to commit
rank fraud or just drift into doing it. How they do it is fascinating in
itself, but I was even more struck by Black's analysis of their motivation
Says Black of the spectacular crooks of capitalism: "Do they
know what is going on? Some part of them knows. People are very good at
denial. In the criminal business, our jargon is 'neutralization techniques.'
Rationalization is just one of those. For examples, the Keatings of the
world don't simply do the, 'Well, it's OK, everybody does it' type of
rationalization. They have a much better variant. It's: 'We are geniuses. We
are transcendent individuals, and we are dealing with stupid bureaucrats.'
"You tell each of your people -- and you've hired very callow
folks with very little experience -- they are geniuses. You fire anybody who
asks questions. That was the central rule. Pretty soon, you have a group of
yes-men who think they are really bright. And the next step is to say, 'Not
only are the government regulators stupid, but they are out to get us.' It's
Us against Them. ... What we seem unwilling in our business culture to admit
is that it became a fraud a long time ago in a broad range of businesses."
Black goes on to cite several common tax dodges and accounting
tricks. The erosion of morality in the business world is so massive and so
obvious, I trust Bill Bennett, the Ethics Czar, will take up the subject
momentarily.
While it is a certainly a pleasant exercise to point out other
people's moral failings, the larger problem is, as Black says, "you can
screw up your economy big time. I have some hope that the collapse of our
tech bubble, which was one of the largest bubbles in the history of the
world, has also scared some folks into thinking that maybe this isn't such a
clever way of doing it. Unfortunately, the attitude was, 'The rules are
silly,' and, 'Aren't we so cleaver?' And that combination produces a lot of
the worst disasters."
For me, some of the dots have come from friends who also happen
to be corporate wives. It is quite striking how their level of concern about
business morality has been rising off the charts. Connect the dots.
To find out more about Molly Ivins and read features by other
Creators Syndicate writers and cartoonists, visit the Creators Syndicate web
page at
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