A world of cheats

William F. Buckley
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Posted: Jun 19, 2002 12:00 AM
The cartoon across the op-ed page of The New York Times is by James Stevenson of The New Yorker. We see a marching file of balding middle-aged men in vacation garb, grins on their faces, caps and hats tossed in the air jubilantly, a band bringing up the rear, two bassoons prominent. The title: "New Parade: Bermuda Day." The caption reads: "Top Executives March Down Fifth Avenue to Celebrate the Island Where Their Corporations Are Registered to Avoid Taxes."

Pro-capitalists wince. Because, of course, it's true: tax avoidance.

On the same day, on the front page of the business section, we learn about the generosity of Enron to its top employees in the last 12 months the company did business. The headliner is chairman Kenneth Lay who, when you pull it all together, seems to have got $103,559,793, not counting change. Trading executive Mark Frevert was paid $17 million. The twenty executives cited got less, going down to the bottom of the list, to Gene E. Humphrey, in charge of community services, who received $3 million. Actually, $3,100,224. Six-digit ancillaries in million-dollar figures don't strike the eye very sharply; $100,000 is something more than a mere gratuity.

It goes on, of course. Adelphia ... Tyco ... Qwest ... Economists are scratching their heads, wondering why, in the dizzy '90s, salaries for top executives climbed to stratospheric levels. The complaisant ideological true believer will say simply that the scarcity of a product determines its value, and if someone is paid $10 million to head up a company, that suggests that $9 million wouldn't get you someone of equal competence. But it requires nothing much more than dumb horse sense to know that you didn't need to pay $3.1 million to handle effectively the community services requirements of Enron, let alone $100 million to the chairman, though maybe if he had been paid $1 billion, he'd have steered Enron other than into bankruptcy.

Less noticeable in the news today is the story of the cruise ship in the shipyard in Mississippi on which the government will have lost $187 million in guaranteed loans, in its effort to revive the shipbuilding industry in America. There is a picture of the incomplete cruise ship squatting in the yard. It is unadorned by a Stevenson cartoon, which is a pity since he could have got a nice tease out of the fact that the cruise ship can't float on water.

Things would seem to be awry in U.S. commerce. One effort to get some orientation on the matter was embodied in the lawsuit against Arthur Andersen, the auditors who served Enron and, given what happened to Enron, will now go out of business. The Department of Justice won its case, but the jurors revealed that they were moved to vote for a guilty verdict primarily by a letter of advice from an Enron lawyer-employee that seemed to say that a proposed report should be bowdlerized by omitting one sentence. Since that advice was arguably protected by lawyer-client privilege, the verdict will probably be appealed.

In any case, nothing was really established in that trial of a kind that informed the community about what is going on in the world of commerce. What has certainly not been achieved is a plan that would clean up the mess. That would have to be

some (ITAL) reform -- one that would require a company, DNA-tested as a U.S. company, to pay U.S. corporate taxes. One that would expose preposterous corporate compensations to insurrectionary action by stockholders. One that would keep the government from spending money from taxes in order to build colossal non-floating cruise ships for the single purpose of patronizing a boatyard in the home state of Trent Lott. Going to Bermuda in order to beat taxes is, after all, on the same ethical plane as going to Mississippi to beat the world-market price for building a cruise ship.

The American public does not appear to be roiled by extravagances of government or of corporate life. But it could happen and heads would roll. Then we would know the worst of it, which is, of course, that the Enrons go out of business and life goes on -- but governments can't go out of business; their depredations live on.