The Acton Institute
(The Acton Institute works to promote a free and virtuous society characterized by individual liberty and sustained by religious principles. Its goal is to help build prosperity and progress on a foundation of religious liberty, economic freedom, and personal moral responsibility.)
GRAND RAPIDS, Mich.--The Moral Potential of Big Business
By Jerry Zandstra
Anyone who is honest must admit that Enron has created a mess. People have lost jobs, investments, and retirement funds. But what, or more appropriately, who, is to blame?
Pundits are struggling to make sense of Enron's ugliness. In his January 18 New York Times editorial, "A System Corrupted," Paul Krugman writes: "The Enron debacle is not just the story of a company that failed; it is the story of a system that failed. And the system didn't fail through carelessness or laziness; it was corrupted." Shame on wingtip wearers everywhere.
George Gilder's recent Wall Street Journal editorial, "A Corporate Crime Wave?" offers, "If you believe the news coverage, corporate leaders are racing to despoil, mulct, defraud, poison, pillage, and ruin their own businesses, their nation's soils and waters, their retirement funds, and the world economy." Take that, Mr. Krugman.
A careful review of recent Enron-related editorials like Krugman's--editorials that far outnumber the Gilder-style offerings--reveals that, while perhaps overstating his case a bit, Mr. Gilder isn't far from the truth. Anti-business, anti-free market factions are using Enron as ammunition for a constant barrage, seeking to lay the blame for societal evils at the feet of large corporations while calling for greater government involvement in business dealings.
Enron provides an example of what happens when corruption leaks into and becomes part of the corporate culture. But Enron's failure is not an indictment of business, or even big business, as a whole. To the contrary, corporations have the potential to meet societal needs that no entity--especially one that is taxpayer funded--is able to address.
Case in point: this past week, another big company, often maligned in the media and by anti-business folks, did something interesting. Not much was made of it, however, especially with Enron occupying the public eye. The company in question is Pfizer, the gigantic pharmaceutical firm, which addressed a pressing need in our country: the availability of prescription drugs for the poor.
Approximately 65 percent of people over the age of 65 have some kind of coverage for prescription drugs. The remaining 35 percent have none. Of course, this does not mean that all of them cannot afford supplemental insurance. Some portion of this population chooses not buy supplemental coverage, which is their decision. After removing those who have insurance and those who choose not to carry it, we get to the core: the poor, mostly elderly, who have daily need of medication but cannot afford the supplemental insurance or the medicine itself. Horror stories abound about elderly widows who cut their pills in half because a partial dose seems better than none at all.
What to do about this? Prescription drug benefits were, after all, a major thrust of the presidential campaign debates in 2000. Both Democrats and Republicans have floated plans. One Republican plan would cost $40 per month, have an annual deduction of $250, and cover half the cost of prescription drugs up to $2,100. A Democratic draft would cost $25 per month and pay half the cost of prescription medication up to $2,000.
The problem with these offerings, like all government programs, is that it is difficult to target just one segment of the population. Equity is something our laws take seriously. People who can afford other forms of prescription insurance and those who choose not to carry supplemental insurance now seemingly should be included in the governmental coverage. But even then the proposals do little to address the real problem.
While each might provide a little relief, both fail to exclude those who don't really need the service, and truly address the people who need help. But if these are the only options available, perhaps it is wise to choose one and hope for the best.
Enter Pfizer. The pharmaceutical giant, often criticized for its alleged greed, for profiting on people's illnesses, accused of lining the pockets of its wealthy stockholders with money taken from the poor, made an announcement a few days ago designed to meet the pharmaceutical needs of our nation's poor.
Beginning March 1, Pfizer will provide something called a "Share Card" which will allow the user to purchase a one-month supply of any Pfizer medicine for a flat fee of $15. To be a part of the program, you have to be 65 years or older or a Medicare enrollee, have an individual income below $18,000 for an individual or $24,000 for a couple, and have no other prescription coverage.
There is no monthly fee; the patient pays for what he or she uses. There is no membership fee or limit on the number of prescriptions, and the enrollment form is simple. Participants can use the pharmacy of their choice.
It is a private industry plan that does something no government plan can do: it excludes those who really are not in need of help and it targets those who are in need of relief. It does not create another giant government-run bureaucracy, and, like all great ideas, it is uncomplicated. Pfizer's plan has been endorsed by dozens of elderly associations, medical foundations, and politicians.
So what's the motivation? Pfizer, like most companies, is serious about its business. It is in their interest to make a profit and to benefit shareholders. There ought to be no guilt or shame in stating this clearly. It is likely that this endeavor will increase Pfizer's share of the pharmaceutical business. Moreover, as orders for medicine increase, the cost of production per piece will decrease.
But it is also good for consumers. Other companies will be forced to respond. They will either begin similar programs or they will lose a share of the market. Furthermore, consumers will benefit from the decrease in cost. In other words, it's good business.
Like most companies, Pfizer understands its responsibilities to its communities and motivated by more than self-interest. Pfizer's actions demonstrate an understanding of the benefits such services offer the elderly poor, as well the bottom line.
Enron is an example of all that is ugly in the free market system. But there are other places to look to get a balanced, realistic picture of the business world. Pfizer is a fine example. Their example proves that it is possible--and logical--to be serious about profit and social responsibility.
(Rev. Jerry Zandstra is the director of programs at the Acton Institute and an ordained pastor in the Christian Reformed Church of North America.)
The Cato Institute
WASHINGTON--President Bush Should Focus On Crushing Al Qaeda, Not Expanding War On Terror, Says Cato Analyst
In his State of the Union address, President Bush threatened to expand the war on terrorism to countries that are developing weapons of mass destruction or that are "timid in the face of terror." The president singled out three nations--North Korea, Iran and Iraq--as the "axis of evil" and implied that he might take military action to preempt the threat from their weapons of mass destruction.
Ivan Eland, director of defense policy studies at the Cato Institute, had the following comments:
"Although such rhetoric may simply be saber rattling to intimidate those nations, the possibility of an expansion of the war is a real and dangerous possibility. Those three countries hardly constitute an organized alliance against the United States--as did the much more dangerous collaboration among Japan, Germany, and Italy during World War II. Iran and Iraq hate each other. North Korea can't feed itself. And although all three countries are developing (or have acquired) weapons of mass destruction, so are many other nations.
"According to the Pentagon, 12 countries have nuclear weapons programs, 13 nations have biological weapons, 16 countries have chemical weapons and 28 nations have ballistic missiles. Is the president prepared to attack all of those nations? What if North Korea, Iran or Iraq have already sent intelligence operatives or terrorists to the United States with weapons of mass destruction to lie in wait in case a strike is needed in retaliation for a U.S. attempt at regime change?
"North Korea, Iran or Iraq are poor nations on the other side of the world from the United States and should not be natural enemies of the United States--unless the United States keeps intervening in their regions. Furthermore, if the president attacks North Korea, Iran or Iraq, he could exacerbate the proliferation problem rather than reduce it. Other nations would believe that they could be next and think that working on missiles and weapons of mass destruction was the only way to keep out a superpower bent on intervening everywhere in the name of fighting terrorism. And would the United States really intervene unilaterally in friendly nations that it believed were too timid in fighting terrorism--for example, the Philippines or Yemen?
"U.S. action to combat the most dire threat to the homeland in a half century is in danger of being diluted. The administration cannot afford to divert its attention toward terrorist groups that do not have the United States as the primary target (for example, Hezbollah, Hamas, Islamic Jihad, and Jaish-e-Muhammad), toward intervening against oppressive nations such as North Korea, Iran and Iraq, or even intervening in "timid" nations.
Al Qaeda, a global terrorist organization, probably still has most of its leadership and worldwide network intact and U.S. targets in its crosshairs. The United States must focus on crushing that imminent threat."
LOS ANGELES--Don't Mess with Success: Congress ought to re-up welfare reform as is.
By Michael W. Lynch
"Good jobs must be the aim of welfare reform," President Bush declared in his State of the Union address. "As we reauthorize these important reforms, we must always remember that the goal is to reduce dependency on government and offer every American the dignity of a job."
That Bush tossed these lines into his address must strike people as odd. Didn't Congress put welfare reform in the "task completed" column back in 1996? It didn't. The 1996 reform expires in September, and the angling to undo it is already underway.
Some people never thought the reform would succeed. Former Sen. Daniel Patrick Moynihan (D, N.Y.) spoke for many when he declared from the Senate floor, "We are putting our children at risk with absolutely no evidence that this radical idea has even the slightest chance of success."
Two prominent Clinton administration officials quit to protest the heartless act. The Urban Institute churned out a study that claimed in exquisite econometric detail that the bill would hurl 2.6 million Americans, 1.1 million of them children, into poverty.
None of the predictions came to pass. It turned out that welfare recipients were capable of getting and holding jobs, and millions of them did just that. At one point, 6,000 people were leaving the rolls each day.
The effect of working was -- big surprise -- an increase in income for those earning the paychecks. Critics will allow the new system some of its success -- they can't deny it. But it wasn't long until they started fretting about recession.
"It does OK in calm waters," Jared Bernstein, an economist at the left-of-center Economic Policy Institute, told National Journal. "But my feeling is that in a storm it won't do so well."
Now that the skies have clouded up a bit, welfare advocates are looking to remodel the program. Like all remodel jobs, it'll take money. Sponsors of a Democratic bill want the federal grants increased automatically each year, a doubling of the money for child care grants, and hundreds of millions more to reward states for reducing poverty. They also want to ease up on work requirements, returning to the days when cooling one's heels in a two-year education program counted as work.
They'll have plenty of help from the press.
"A yearlong struggle over welfare policy will begin on Thursday when House Democrats offer a proposal to convert the 1996 welfare law into a tool for reducing poverty," read a January 24 article in The New York Times. Reporter Robert Pear buried the fact that the 1996 bill is already the best anti-poverty weapon the federal government has devised.
Today, 2.6 million fewer adults and 2.8 million fewer children live in poverty than in 1996. As a bumper sticker put it in a less-enlightened time, "Fight Poverty, Get a Job."
Now the nation's governors, for whom welfare reform proved to be a windfall, have entered the debate. Clinton's reform froze federal funding at record levels and delivered it to the states in block grants. As caseloads declined, states have more money to spend on each person. That, of course, is not how they see it.
"When we took the block grant, we took the economic risk in all of this," executive director of the National Governor's Association Raymond C. Scheppach told the Times. "What we're saying now is that we are willing to do that, except when there's a huge economic disruption."
The states didn't take any huge risks -- or if they did, they paid off as well as Democratic National Committee boss Terry McAuliffe's investment in the now bankrupt Global Crossing, or Hillary Clinton's bet on cattle futures. And they aren't spending more money. In fact, states are spending only 75 percent of what they spent in 1996.
What he's actually saying is that states have been on a spending binge, the bill is now come due, and now they want even more federal tax money. It's time for the governors to practice some "personal responsibility" of their own and try to put their books in balance.
With the war, 10 Enron investigations, a fight over campaign finance reform, and Sen. Robert Byrd's ongoing efforts to complete the federal government's relocation to West Virginia, Congress has plenty to do and plenty of projects to spend our money on.
Governors can dip into their own pockets. Congress shouldn't mess with success. It ought to savor the rare experience.
(Michael W. Lynch is Reason magazine's national correspondent.)
LOS ANGELES--Al Qaeda Alchemy: How Bush went from bumbler to statesman.
By Charles Paul Freund
"Those of us who have lived through these challenging times have been changed by them," said President George W. Bush in his State of the Union message on Tuesday.
Surely few people have been changed more than Bush himself. Having entered the presidency only after a bitter and divisive recount farce that undermined the authority he brought to the office; having arrived in Washington perceived as inarticulate and barely informed about world affairs, the president one year later stood before a joint session of Congress and, in a few words, reshuffled the world.
"Evil is real," he said in what has become the foundational thesis of his presidency, "and it must be opposed." In the heart of his address, Bush identified an "axis of evil" to which the U.S. will now oppose itself. That Axis includes Iraq, which has been the subject of a continuous din of threat since September 11. But it also includes Iran and North Korea, about which the administration had been circumspect.
Indeed, in the weeks preceding the military action in Afghanistan, the U.S. had appeared to seek some common ground of cooperation with Teheran. Now, Iran and North Korea emerge as regimes that are "arming to threaten the peace of the world" and that "pose a grave and growing danger."
Bush said that the U.S. "will not permit the world's most dangerous regimes to threaten us with the world's most destructive weapons." What will the U.S. do? "America will do what is necessary to ensure our nation's security."
That obviously leaves a lot of room, but at the same time it defines an unexpectedly hard global position, and it sets the apparent next stage in a now open and largely unilateral program of Pax Americana. It is not merely terror organizations such as Al Qaeda that the U.S. perceives as threats; it is now specific nation-states as well. (Indeed, the list of terror groups itself has grown to include such anti-Israel movements as Islamic Jihad and Hizbollah, among others, groups that until Tuesday the United States had avoided citing publicly as targets of its anti-terror campaign.)
Who is the alchemist responsible for such a sweeping transformation, of Bush if not of the U.S and of the entire globe? It is of course the missing Osama bin Laden, who went unmentioned in the president's address. Yet, that bin Laden's attack would result in something like Bush's strategic vision was actually foreseeable; it was certainly foreseen last November in a remarkably prescient essay by Tim Hames that appeared in The Times of London.
Hames predicted that the attacks on the U.S. would make it a far more muscular nation than it had been in recent decades, especially under Bill Clinton, and that the attacks would result in "an unambiguous version of Pax Americana."
"This is then the paradoxical achievement of bin Laden and his network," wrote Hames. "They spent many years planning the attacks on New York and Washington in the belief that they would humiliate the United States, drive all aspects of American influence out of the Middle East and then trigger a global economic meltdown.
"It is instead far more probable that the end result of their foul endeavours will be a vast reassertion of American power, the humiliation of radical Islam and a stronger economy than would have occurred if al-Qaeda had stayed in its caves. With enemies like this, who needs friends?"
Yet there is a paradox of sorts in Hames' prediction of the American response to challenge. While Bush bases his argument on a supposed national transformation brought on by the attacks, observers like Hames were able to foresee the likely strategic result precisely because they accurately perceived the American character in advance of the attacks. That is, they well understood how Americans have responded historically to challenge, and that Americans would likely support an assertion of national power as a result.
Bush's claim of national transformation was not only the basis of his global strategy, it was also the foundation of his concluding call to domestic action, especially a vast program of federally organized volunteerism.
"After America was attacked," he said near the end of his remarks, "it was as if our entire country looked into a mirror and saw our better selves. We were reminded that we are citizens with obligations to each other, to our country, and to history. We began to think less of the goods we can accumulate, and more about the good we can do."
Yet American strength emerges from the system Americans had built before the attack, a system they understood as the basis of their commonality of values, their prosperity, and their opportunity. It is precisely in defense of the existing system and its values that Americans have exerted themselves when under threat, and not because of any transmogrification.
Bush's rhetoric of change appears to emerge from his politics of compassion; it may well be in his interest to portray the nation in change. The nation, however, has an agenda impelled by its own history and tradition. It has changed less than he suggests, and he has changed more.
(Charles Paul Freund is a senior editor at Reason magazine.)
Institute for Public Accuracy
(The IPA is a nationwide consortium of policy researchers that seeks to broaden public discourse by gaining media access for experts whose perspectives are often overshadowed by major think tanks and other influential institutions.)
WASHINGTON--An Enron Model for the World? Deregulation and the WEF in Manhattan
*Greg Palast, internationally recognized expert on regulation of power markets and author of "Regulation and Democracy," an upcoming U.N. study. On a Jan. 24, 2001 news release by the Institute for Public Accuracy, he said:
"The California blackouts are a simple case of greed run amok.... The big winners in this monstrosity are Enron -- the largest career contributor to George W. Bush -- and other energy companies who have strangled the market. 'Deregulation' is a lie -- it is simply moving regulation from democratic government agencies to an unelected circle of market manipulators." Palast said today: "There's a whole band of power pirates out there fiddling the books, rigging the markets, and buying and selling politicians like bags of sugar -- from Argentina to Houston to Washington to New York. In fact, you simply can't divide the collapse of Enron from the collapse of Argentina. Enron wasn't a bad apple -- the entire system of deregulating electricity is rotten, root and branch. Arthur Andersen didn't have a few bad boys. As an investigator, I've watched their financial finagling run amok -- all under the name of 'innovation.' They just don't get it: one, two, a hundred Enrons are charging down on us, and a dozen Argentinas -- unless we restore the right to put the reins on these let-the-markets-rule pirates. That's why kids were in the streets of Seattle, and are now protesting the World Economic Forum. It's more than a protest, it's a wake-up call..."
*Colleen Freeman, a grassroots coordinator for Friends of the Earth, which co-coordinates the "Public Eye on Davos" coalition.
"In the institution's own words, the WEF is a private club for the world's 'foremost corporations.' In this secluded space away from the public eye, they promote a one-sided model of economic globalization that overwhelmingly enriches the industrialized countries and their corporations while deepening global economic inequities and further degrading the environment."
*Simon Greer, program director at Jobs With Justice.
"Ironically, this year as New York City faces the aftermath of Sept. 11, as the nation struggles with a harsh recession, and as the insecurities of the global economy become more and more real, the WEF claims they are coming to New York to demonstrate their concern. Yet, nowhere in their agenda do they face the fact that the last 20 years have been an abject economic failure for the entire set of low and middle-income countries. Nor do they seem prepared to address the re-emergence of sweatshop, child and slave labor as a gruesome foundation of the profit-driven global economy that they have blueprinted. Presenters at the WEF will likely promote the notion of deregulation, and to them we will offer a one word question: Enron?"