WASHINGTON, Feb. 6 (UPI) -- The UPI Think Tank Wrap-up is a daily digest covering brief opinion pieces, reactions to recent news events, and position statements released by various think tanks.
The Cato Institute
Study: Amtrak reform plan too little, too late
Tomorrow, the Amtrak Reform Council will submit to Congress its reorganization plan to Congress for the federal government's beleaguered passenger rail system. But according to a new Cato Institute study, that plan "ignores fundamental problems and represents a too-little, too-late departure from Amtrak's present structure."
In "A Plan to Liquidate Amtrak," former ARC member Joseph Vranich, bankruptcy lawyer Cornelius Chapman, and Edward L. Hudgins, director of regulatory studies at the Cato Institute, put forth their own plan. They recommend Amtrak be subjected to a Chapter 11 bankruptcy proceeding that would put its worthwhile assets in private hands while recouping some of the billions of dollars U.S. taxpayers have sunk into the money-losing train monopoly.
"The virtue of a Chapter 11 proceeding is that it is insulated from political pressures, since a bankruptcy judge has both express statutory authority and broad equitable powers to deal with Amtrak simply in terms of its debts and its creditors," the authors write.
"Although Amtrak under law was supposed to draw up its own liquidation plan, a handful of senators recently blocked it from doing so," Hudgins said. "Bankruptcy would force Amtrak to open its now-veiled books to the public and policy makers."
This is in contrast to the ARC's proposal to simply reorganize Amtrak's holdings, a plan that the authors say appears to be anti-competitive and sets up the rail line to fail again and again. According to the study, rail bankruptcies are nothing new: In the 1890's when trains were the primary mode of intercity passenger transportation, thousands of miles of rail were taken over by the courts or sold at foreclosure without a national crisis ensuing.
The report is available as Policy Analysis no. 424 on the Cato Institute Web site at http://www.cato.org/pubs/pas/pa-424es.html.
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.)
Enron: A Corporate Giant, At Home and Abroad
* Andrew Wheat, research director for Texans for Public Justice, a non-profit policy and research organization which tracks the influence of money in politics, wrote:
"President Bush's explanation of his relationship to Enron is at best a half truth. He was in bed with Enron before he ever held a political office ... Although Enron is George W. Bush's No. 1 career donor, the president also is heavily indebted to the professional firms that aided and abetted the greatest bankruptcy and shareholder meltdown in U.S. history. Enron's 'independent' auditor and 'outside' law firm -- whose own questionable actions in the Enron debacle are being probed -- gave a total of $560,385 to Bush's gubernatorial and presidential campaigns. In addition, Arthur Andersen and Vinson & Elkins (law firm) accounted for four of Bush's elite 'Pioneer' fundraisers who collectively moved at least $400,000 more to Bush's presidential campaign; Enron Chair Ken Lay was another Pioneer."
-- Victoria Tauli-Corpuz, founder and executive director of the Tebtebba Foundation -- the Indigenous Peoples' International Center for Policy Research and Education -- in the Philippines, wrote:
"Corruption and bad governance are usually the main reasons cited by the northern governments, the World Bank, the IMF and even the WTO on why aid programs fail and why there is too much poverty in the [global] south. What is not being said, however, is that corruption and bad governance are equally applicable to them. Enron is again a clear case of corruption and bad governance not only within the corporation but within the U.S. government. The behavior of Enron in India since it signed a Power Purchase Agreement with the Congress Party for a 740-megawatt power plant in l993 is an exhibition of corruptive practices. What this tells us is that there is a need for more democratic and transparent global and national institutions which will regulate the behavior of corporations to make them more accountable."
The Pacific Research Institute
(PRI promotes individual freedom and personal responsibility as the cornerstones of a civil society, best achieved through a free-market economy, limited government, and private initiative. PRI researches and analyzes critical issues facing California and the nation, and crafts strategies for policy reform.)
The Gap Ceiling
By Sally C. Pipes
A new congressional study confirms that not everything has changed since Sept. 11. Governments continue to waste their time and taxpayers' money in the endless search for statistical disparities between men and women.
Rep. Carolyn B. Mahoney, a Manhattan Democrat, commissioned the General Accounting Office to conduct a study comparing the managerial salaries of men and women. The study, released Jan. 23, found exactly what the congresswoman wanted it to find -- a gap between the salaries of male and female managers.
Moreover, the study says this gap has grown since 1995, as much as 21 cents for every dollar earned. Women continue to be scarce in managerial ranks and mothers have "lost the most ground," said the study which considered 10 industries.
In the entertainment business, the study claims, women earned 62 cents for every dollar earned by a man, down from 83 cents in 1995. In the communications field, the figure is 73 cents, down from 86 cents. And so on, all completely predictable and without significance of any sort.
In the first place, personal differences, effort, and choice ensure that statistical disparities between men and women, like those between any individuals or groups, will be the rule rather than the exception.
Statistical disparities, contrary to the prevailing orthodoxy of political correctness, do not by themselves indicate discrimination, which is what Rep. Mahoney and her colleagues are driving at.
Rep. John Dingell, Michigan Democrat, is beating the drum for hearings on the study, calling it a "family issue." In a way, it is.
Women make decisions about the kind of career they want. With the feminist movement losing clout, those decisions increasingly involve children, and professions that enable women to spend more time at home. Attempts to resurrect discrimination claims based on dubious statistics serve to devalue women's choices, such as family, volunteer work, and self-employment.
Education, years of experience, and number of hours worked per week are other variables that effect salaries. When men and women have the same education and continuous time in the work force, the salary gap disappears. For example, studies by the Pacific Research Institute, Independent Women's Forum, and others have revealed that in economics, my own field of study, women earn 100 percent of what men earn.
In architecture and environmental design, women earn more, a full 109 percent. In engineering, a supposedly male dominated field, women earn 99 percent of men's earnings; they earn 97 percent in chemistry and 94 percent in computer and information sciences.
How these women could have fared this well in the face of rampant discrimination remains a mystery. On the other hand, it is easy to explain the persistence of often-refuted charges of salary gaps between men and women. Politicians, pressured by militant feminists, deploy government bureaucrats to create a salary-gap crisis, which they say is getting worse. This is supposed to evoke a public response of "do something." Then comes the legislation, which in this case will be some kind of equal-pay statute.
"We didn't spread the wealth," said Rep. Mahoney. "We grew the disparity." But since Rep. Mahoney and her colleagues didn't create any wealth, they couldn't very well spread it. Neither did they grow any disparity. What happened was that women made independent decisions, in some cases to work as managers, in other cases to do other things. Women's decisions should be respected, not used for yet another government crusade.
The market, not some equal-pay index, should set salaries. Companies should hire managers based on qualifications, not gender. In cases where discrimination does exist, the law already provides for a remedy. For politicians eager find gaps and fix them, however, there are legitimate fields of inquiry.
Governments exist to protect life, liberty, and property, not to find discrepancies between their assumed norms and reality. One would think that a congresswoman from New York would be particularly interested in the gap between the number of terrorists we have apprehended and the number still at large in the United States. The INS has no clue to the whereabouts of thousands who entered the United States legally but overstayed their visas. Maybe the GAO, adept at finding gaps that don't exist, could locate these people.
(Sally Pipes is the President and CEO of the Pacific Research Institute, a California-based think tank. She can be reached via email at [email protected].)
Competitive Enterprise Institute
(CEI is a free-market think tank that supports principles of free enterprise and limited government, and actively engages in public policy debate.)
C:\SPIN: Pigs Fly, Hell Freezes--And Accounting Becomes Interesting
James V. DeLong
The Enron debacle has achieved something that would have been presumed impossible a few months ago: It has riveted attention on accounting, a subject normally regarded as so dry that its professional journals could, if ground up, be sold as soporifics. The attention probably won't last, because the 15 minutes of fame afforded all scandals will expire. Which is unfortunate, because accounting problems are at the crux of quite a few crucial contemporary imbroglios, and sustained attention would be healthy.
One of these problems is that our ability to assess the value of enterprises that depend on intellectual property and other intangibles is tenuous. As one economist noted:
"Back in the Gilded Age ... industrial success ... was based on knowledge crystallized in dedicated capital. Lots of people knew organic chemistry. Few companies -- those that had made massive investments -- could make organic chemicals. Now intellectual property is rapidly becoming a much more important source of value."
We can assess the value of capital embodied in chemical plants; assessing future returns from knowledge is rather harder.
Enron is a good example. Leaving aside such details as conflict of interest and misrepresentation, its capitalization was based on information about energy markets and trading savvy. Financial markets did poorly in assessing the value of these.
The telecom industry presents other examples of valuation problems. Questions have arisen about the timing of revenue recognition, swaps, and other dubious practices, but there is a more basic issue. Companies that, as of about 1996, foresaw a shortage of fiber optic cable capacity were not the fools of their current depiction in the press.
Few observers anticipated the progress that multiplied the capacity of fiber by orders of magnitude. Nor did the telecoms anticipate the regulatory retrogression that mired the system in Inside-The-Beltway rent-seeking wars. How do you formalize into accounting models the need to discount for the possibility of scientific progress and regulatory reaction?
Thoughts about valuation naturally involve the Securities and Exchange Commission, which has enjoyed an aura of sanctity for 70 years. One hates to sound like a throwback to a 19th Century Populist railing at Wall Street, but a major force for the original securities acts was the desire by dominant New York financiers to strangle competition that was arising in the hinterland, and they succeeded. Since then, the relationship between the commission and the big financial players has been cozy, with intense attention devoted to disclosures of minor value combined with blindness to serious misalignments of incentive structures.
Even the SEC's ferocious war on insider trading, says a recent article in Regulation, was designed not to eliminate the value of inside information but to transfer it away from corporate executives and toward financial firms.
When the investment analysts and accountants are immolated, the SEC should be treated as a co-conspirator, not as a victim or bystander.
Yet another accounting issue is the tax code. Enron's Byzantine partnership structure may have been dictated by tax considerations. Tech industries suffer from depreciation schedules based on physical life (five years, usually) instead of economic life. This distorts investment decisions and forces companies into sleight of hand tactics simply to recognize reality. Making business decisions hostage not just to accounting but to tax accounting is a double whammy.
So by all means let the purging winds blow through accounting practices. But it would nice if for once we remembered that a steady breeze of continuing attention can do more useful work than a quickly exhausted gale of indignation.
(James V. DeLong is a senior fellow in the Project on Technology and Innovation at the Competitive Enterprise Institute.)
