On the Right - Thomas Keneally; Pres. Bush's Middle East policy; business ethics - Column

National Review, July 29, 2002 by William F. Buckley, Jr.

What appears to the inquirer as unique in today's situation is a body of actors who disengage from the accepted disciplines and do so with apparent impunity. The big question today is: Are these individual miscreants, or do we have an operating class, beyond the reach of the law, on the order of the profession of prostitution?

We have here the second wave of apparently deracinated evildoers, in the course of a single year. The first was the priests, who in outrageous defiance of primary obligations of their profession, abuse children, no less. Abusing stockholders is perhaps less iniquitous. But this set of miscreants are giving reasons why they did as they did, high exercises in self-exculpatory art. When an official of WorldCom reports that he could see nothing wrong, let alone unusual about classifying moneys dispensed as capitalized expenditures when in fact they were moneys spent in doing business, the question arises: Can that man see anything as wrong? And if so, does he emerge as simply one criminal practitioner, or is he a member of a class newly acceptable in American business?

There has been speculation over two generations about who actually controls business enterprise. James Burnham, in 1940, argued the thesis of the Managerial Revolution. It isn't the stockholders who run things, it is the people they nominate to serve in management, people they almost immediately lose control of, he argued. This is so because keeping up with what they do, let alone supervising what they do, is a practical impossibility. Stockholders are left with the power to remove, which can be likened to the power of Congress to impeach. They have the advantage of a hypothetical watchdog, requiring the execution of certain formalities, like a company's annual reports. What was envisioned as supplementing stockholders' rights was the concept of the public's rights. A WorldCom CEO who dissimulates damages his stockholders, but hurts also a public that, taking heed of what happened at WorldCom, Inc., hesitates to back other ventures; slowing down the dynamic of capitalism, and inducing skepticism about the very idea of private enterprise.

Congress is busy trying to come up with revised systems of auditing. The most prominent reform being discussed is outlawing the accounting firm that acts in a second capacity as company consultant. That idea would seem to be commendable, though the practice of it could be hard on the smaller of the 16,000 publicly traded companies that would now have to add an entire service echelon to the cost of doing business.

What is needed quickly and extensively is: punishment.

In the late 1930s, no less a figure than a former president of the New York Stock Exchange went to jail for the misuse of funds.

This is not a call to the denial of due process, but a call to the legitimate use of public punishment as a retributive act. In the public- school lore of Great Britain there is the story of the senior boy nailed for public indecorum and had up for a flogging. He pleads, in deference to his seniority, to be punished outside the view of voyeuristic fellow students.