Enron, the biggest financial failure in U.S. history, is bigger than Enron. It?s also bigger than Global Crossing and all the earnings restatements headed our way, too. ?Systemic,? ?structural? and ?epidemic? are the key words here. Take, for example, the gladsome tidings that Enron paid no taxes whatever during four of the past five years by cleverly transferring its assets to 881 subsidiaries in tax-shelter countries. (Also take the item that Enron would have gotten a $254 million tax rebate under the Republican ?economic stimulus? package?please. The bill is now mercifully defunct.)
Enron?s tax practices are so common that the Center for Public Integrity estimates they cost the country $195 billion a year, which means the rest of us have to make up that missing tax money. That comes to $1,600 per taxpayer. See? Your very own stake in the Enron fiasco.
Arthur Levitt, former chairman of the Securities and Exchange Commis-sion and now a hero because he saw this coming?nobody paid attention to him the ?90s, of course?testified, ?What has failed is nothing less than the system for overseeing our capital markets.? Unfortunately, the new SEC chair, Harvey Pitt, is a Bushie who thinks the way to cure the accounting scandals is to have tighter voluntary regulations for accounting firms. Bush tried that voluntary regulation when he was governor. Did it work? Not hardly, as they say in West Texas.
So now everyone is hot for ree-form, or at least pretending to be (Rep. Bill Tauzin of Louisiana is especially amusing in the role). They want to reform accounting, reform the campaign financing system, reform stock analysts. Take my word on this, George W. Bush will support a few cosmetic reforms, probably of 401K plans, and then run next time as a reformer. That?s how he became ?the father? of the Texas patients? bill of rights.
Our more ambitious reformers would like to do something about the tax structure, maybe even rethink the role of corporations in America. But they?re not thinking big enough, either. One of the major political parties is congenitally opposed to government regulation of any kind, and the other one is almost as bad, simply because of the way campaigns are financed in this country. Our free-market fundamentalists insist that all this is self-correcting; in fact, according to the secretary of the treasury, Enron is proof positive that the whole system is working beautifully.
Former State Sen. Jack Gordon of Florida, one of the wisest people who ever served in state government, used to listen patiently to anti-regulatory diatribes and then gently suggest: ?Well, if all regulation is bad, let?s start with traffic. Let?s take down all the stoplights and stop signs, and abolish the speed limit, and see what happens.? A couple of crashes will make everyone more careful and then it will work fine, right?
Those who favor the free-market solution to everything keep warning that if we put on too many regulations we will kill the goose that is laying the golden egg. The problem is, this goose is not laying a golden egg?it?s laying an incredibly dangerous bomb. In the current issue of the magazine Tikkun, Jeff Gates, former counsel to the U.S. Senate Finance Committee, rehearses the dreary results both nationally and internationally.
The financial wealth of the top 1 percent of U.S. households now exceeds the combined household financial wealth of the bottom 95 percent.The wealth of the Forbes 400 richest Americans grew an average $1.44 billion each from 1997-2000, for an average daily increase of wealth of $1,920,000 per person. That?s 6,602 times the U.S. minimum wage.The top fifth of U.S. households have 49.2 percent of the national income, while the bottom fifth gets by on 3.6 percent.
The numbers on this immense concentration of wealth get worse every year?the system keeps redistributing money from the poor to the rich. The predictable result, says Gates, is excess physical capacity alongside unmet physical needs. We are now in an overcapacity recession, historically the most difficult to undo.
Nor does the phenomenon stop at our shores: Globalization is doing exactly the same thing internationally. Eighty countries have per capita income lower than a decade ago. In 1960, the income gap between the fifth of the world?s people living in the richest countries and the fifth living in the poorest countries was 30 to one. By 1990, the gap had widened to 60 to 1. By 1998, it was 74 to 1.
There is much more of this in the article, but unlike the WTO protesters, Gates is not in favor of killing the transnational corporation goose. His critique is as harsh as anything we hear from the anti-globalization activists, but his solutions are based on free enterprise democracy. Well worth the trouble it might take you to find Tikkun.
Molly Ivins is a nationally syndicated columnist. Her book with Louis Dubose, Shrub: The Short But Happy Political Life of George W. Bush is out in paperback.