ustxtxb_obs_2002_04_26_50_00018-00000_000.pdf

I’m not writing this essay because I’m angryI’m mad! My father’s daily plea to me was to “have a sense of outrage at injustice.” “Enronics” gives just cause to unrestrained outrage because it is unrestrained unpatriotism, greedy capitalism with total disregard for ethics or love of country. Enron is one example of unpatriotism. Another appeared in The New York Times on February 18, 2002. The column headline on the front page was “U.S. Companies Use Filings in Bermuda to Slash Tax Bills.” I always thought I was fairly sophisticated when it came to finance, but I quickly learned, after reading that article, that I wasn’t nearly as smart as I thought I was. I majored in economics at the University of Texas, and Adam Smith’s Wealth of Nations, which is the predicate for capitalism, was required reading. Smith realized the greed instinct within all of us, but thought that the invisible hand, i.e. competition, would be the moderator or leveler of the greed instinct. Smith did not take into account the tragic effects to the economic system when the players did not play by the rules. Intelligent lawyers and accountants came up with schemes to “legally” avoid the rules by which the rest of us must play. This was combined with lobbyists who appealed to members of Congress to include riders to particular pieces of legislation, which would benefit one particular corporation, and enable it to escape the responsibilities that any patriotic company would observe. Morally, competition means making a better product, merchandising it more intelligently, and paying the ENRONICS BY BERNARD RAPOPORT taxes that all the rest in the same category pay. I ask the question, “Why do we put up with these kind of shenanigans? Why don’t we have a sense of outrage at this injustice? Why don’t we get mad?” I’m reminded of Murray Edelman’s wonderful thought, “Political history is largely an account of mass violence and of the expenditure of vast resources to cope with mythical fears and hopes. At the same time, large groups of people remain quiescent [that’s us!] under noxiously oppressive conditions and sometimes passionately defend the very social institutions that deprive or degrade them.” In plain talk, he says, we too often support or accept actions that are economically and socially disadvantageous. The New York Times article points out that one company made $30 million in additional profit because they didn’t pay taxes. Now if it had played by the same rules as other companies, it would have shown $30 million less profit because of the payment of what it really owes. Guess what! Their stock sells at a much higher price because it has been taking advantage of what I call an “Enronic” approach. At least, such companies should have the courtesy and be required to show what their earnings would be if they were paying on the same basis as their competitors. The Times article also points out that one corporation saved $400 million in taxes! Reducing taxes can be a meaningful objective if these groups to which I’ve referred were truly patriotic. All these companies do to avoid these taxes is have an office in Bermuda or the Caymans or some other island. This is an unfair advantage.As ridiculous as it may sound, a company with one of these offices in Bermuda, for example, can borrow money from its Bermuda account and charge out the interest that it pays to its Bermuda branch, thereby reducing the taxes their U.S. company has to pay. Let’s be quickly reminded that there is no tax on the interest earned by the Bermuda parent. So an additional injustice is compounded. The U.S.Treasury has to borrow money and sell bonds. And you know who buys them? These same corporations! Guess what! The interest they have received on their bonds as a result of their Bermuda office will not be taxable. It’s a vicious circle! Why, oh, why, is there not a sense of outrage about their unconscionable acts of UNPATRIOTISM? Our society has a lot of problems. Lack of corporate patriotism contributes to weakening our confidence in the future. But we can reverse this trend. All that is required is that WE have to demand it! Guiseppe Mazzini said,”God has given you your country as cradle, and humanity as mother; you cannot rightly love your brethren of the cradle if you love not the common mother.” AD COURTESY OF THE I3ERNA RD AND AUDRE RAPOPORT FOUNDATION Bernard Rapoport Chairman of the Board 18 THE TEXAS OBSERVER .4/26/02