by Peter D. Moss
Greed is not highly regarded, but it is highly rewarded. The dictionary says that greed is "inordinate or reprehensible acquisitiveness." Kids caught with their hands in the cookie jar at unauthorized times are, or should be, punished. Still, greed is deeply ingrained in our culture from cookie jar age on, and it is likely incurable. What to do? Eliminate the opportunity for criminal greed. I tried to recommend that a couple of months after Enron hit the headlines. On January 21, 2002, I sent a letter to the editor of The New York Times titled "THE ENRON LESSONS":
Before the election, Mr. Bush said you can't trust the government. After September 11, 2001, President Bush said you must trust the Government. I disagree with Mr. Bush, but I agree with President Bush. The failure of private airport security raised a national demand to federalize airport security. Upon the failure of Enron and Andersen, its auditor, I believe we should federalize megacorporate auditing by establishing a corporate audit division (CAD) in the General Accounting Office because it would not be beholden to its targets. Also, Enron paid no tax in 4 of the last 5 years. That alone suffices to federalize auditing and the proposed GAO CAD should include IRS auditors to insure that all the enrons pay their taxes. It has also been reported that 37 members of the Bush regime held stock in Enron. Once it is determined whether they sold their stock for $90 or 26 cents, we can determine any misconduct. We don't have to make a choice between big government and law enforcement against the bosses, because the two go together.
The anonymity and confidentiality of the stock exchanges protects and encourages insider trading, and I call for closing them to prevent Enron style and Enron sized fraud on the people. Used stocks can be traded like used cars and used homes, so the stock exchanges serve no necessary or useful function. Even bonds are traded without an official exchange. People with a gambling need could go to Las Vegas, Atlantic City, the horse tracks and the lottery. Eliminating the stock exchanges would eliminate insider trading and victimizations, and more importantly, the resurgence of privatizing Social Security. We now know, of course, that the very creation of the commission was an intentional fraud because the commission was specifically precluded from identifying new funding. The "insolvency in 2038" scare was another fraud, solely to raise the issue of privatizing.
For the future, I would increase the wage base for Social Security taxes, now $80,400. I would tax total earned income without limit. But I vigorously object to hiring professional money managers to diversify (read gamble away) the Social Security trust fund. Professionals have shown that they have no specialized knowledge beyond that of the average investor. If they did, they would be billionaires endowing philanthropies instead of working at 9 to 5 jobs. The only people with specialized knowledge are the insider traders, and that's not just Osama bin Laden who knew of 9/11 in time to bet on certain airline stocks. It is true that the government securities in the trust fund will have to be redeemed by tax increases but the taxing ability of the U.S. government is virtually unlimited. If elected, I will be sponsoring a constitutional amendment to provide that "Its obligation to its seniors shall be the senior obligation of the United States in perpetuity." That will take care of future scare campaigns and of the desperate need of stock brokers for a new inflow of funds."
Sincerely, " The Times discarded my letter, as you might expect, because it contained constructive proposals.
Our too-free enterprise system or cowboy capitalism rewards greed so highly that it is simply incomprehensible to most people. Kenneth Lay made off with $300-million of Enron stocks. Bernie Ebbers made off with $400-million from World Com. Lou Gerstner reportedly took a $500-million package upon leaving IBM. The risk? What risk? And more importantly, how to prevent future greed fueled disasters? Not by "rebuilding investor confidence" even if there was any confidence left to rebuild which hopefully there is not.
Punishment of the hard-time-for-hard-crime kind is cheap demagoguery. It is not likely to happen and if it should, it will be useless. How do we know? From history. Croesus was king of Lydia, an ancient kingdom in Asia minor. He became famous for amassing the greatest amount of gold in the ancient world. Then in 546 B.C., some captors did him in: they melted some of his gold and poured it into his mouth and ears. Hot stuff, but it's been 2548 years and it is not forgotten. Today the Supreme Court would hold that cruel and unusual and most people would agree. My objection is more serious: it has not discouraged today's insider traders. And probably nothing can because it is too much a part of our culture. What to do?
What we as a nation must understand and accept is that organized financial markets, usually called Wall Street, are unnecessary evils even in the best of circumstances. Wall Street has been rightly named The Big Casino, but that is undeserved flattery because the game is rigged more than in casinos, lotteries and race tracks. The main or sole real purpose for Wall Street is to enable insider trading. Most people believe that Wall Street is a rational, if not the only posssible, mechanism for capital allocation. But 98% to 99% of transactions involve existing stock, not new capital allocated for new ventures. And needless to say, used stock can be traded just like used cars and used homes. But:
Enron, World Com and many, many more would not have been possible without Wall Street. What investor would buy $300-million in Enron stock at arm's length from Kenneth Lay, without the kind of investigation that would have disclosed the Enron decay to anyone smart enough to have $300-million in hand to invest in Enron? Without the secrecy and anonymity Wall Street provides, the big robberies now being discovered could never have taken place. The hard-time-for-hard-crime demagoguery only lays the ground for the next wave of Wall Street robberies and will certainly do nothing to eliminate greed as a motivator for platinum-collar crime. But eliminating Wall Street will reduce crime opportunities. Top executives can always make single-handed decisions with predictable economic impact but will have no place to cash in on their unshared insider knowledge. If they want to sell $300-million in stock, they will have to do it at arm's length, like a real estate agent selling a home. We cannot expect the beneficiaries of Wall Street insider trading or their bribed politicians to confess and close shop. And a has come to light in recent months, top executives who can always make single-handed decisions in secret are not the only insider traders. We now know that security analysts have been doing it in two separate ways. They can make false "sell" recommendations and when the stock drops, buy it. A little while later, they make a "buy" recommendation and when the stock rises, sell it and pocket the difference. The other, more massive indiser fraud is when analysts are pressured by their investment banking division to recommend a poor stock highly as a favor to investment banking clients, for or in anticipation of bribes from such clients. All these rackets would of course not be possible without Wall Street and organized trading.
So as not to blame the crisis on capitalism, too-free enterprise and conservatism, Bush blamed greed. But as veteran reporter Daniel Schorr noted on VPR, Bush himself is a product of that very greed culture with his Harken dealings and who knows what else.
On July 19, 2002, I spent a solid, solitary hour listening to Harry the Pits, chair, Securities and Exchange Commission, preaching confidence and hard-time-for-hard-crime at the National Press Club. Even for a veteran silver tongued liar for hire, he was totally not credible, as I expected. I listened intently for one word and it never came: greed. Even more seriously, the last 20 minutes were used for Q&A by the corporate media journalists who were the audience and you know what? Not one raised the issue of greed. Why? Because the main stream media know that this regime is not about to do anything, repeat anything, to eliminate greed and the greedy. All they are doing is a filthy white wash to "rebuild investor confidence." Pits did not deceive many people: the Down-Jones closed 400 points down the day of his speech. That drop is twice as big as any following the Bush "rebuilding" speeches. And now, with the 2002 election over, Harry "resigned."
If I am elected, I will charter and organize a Wall Street Victims Organization (WSVO) to shame the Congress into legislation terminating Wall Street to prevent insider trading and to place suspects in protective custody immediately or sooner, not to protect them from lynch mobs but to debrief them as to where they hid or dissipated the loot. Once the loot is recaptured, it must be deposited into an interest bearing Wall Street Victims Compensation Fund under WSVO management. Also, my proposal will include a criminal/civil federal process where any facts obtained by the government prosecutor will be immediately used by the same court to award compensatory and punitive damages to the victim. The government attorney will of course be paid an incentive percentage of the damages awarded to the victim.
I believe a better world is possible and it can be legislated if a majority of the voters will it.