The Hightower Lowdown
A business magazine gushes over the accounting practices of Enron?; Bush gambles with your retirement money; and CEOs create "opportunity" by firing employees.
Biz 'Journalism' and Enron
The December issue of Today's CPA has just crossed my desk, and it features a five-page cover story filled with breathless praise for the corporate accounting procedures used by (get ready now): Enron! Yes, the corporation whose stock plummeted from glory to garbage last year, the corporation that's now in both bankruptcy and disgrace, the corporation that's under SEC investigation, the corporation that's been charged with "massive insider trading" and making "false and misleading" statements about its books, and the corporation that issued such devious financial reports that the corporate name should be changed from Enron to End-run.
The piece in Today's CPA, however, gushes that "Enron's accounting function has been an integral part of its success and vision." The magazine, published by the Texas Society of Certified Public Accountants, paints a glowing portrait of Enron's swashbuckling corporate style, quoting the chief accounting officer as boasting that, "We encourage our employees to try new things."
Yes, like encouraging them to put nearly all of their 401(k) retirement funds in the company's own stock. Then when Enron's stock began to dive last summer and fall, the top executives made a move that locked down the 401(k) accounts of their employees, preventing them from selling the stocks. Because of this forced freeze, thousands of employees were trapped and could only watch in horror as their retirement nest eggs were wiped out as Enron's stock price crashed from $90 to mere pennies. Unknown to the employees, however, those same executives had quietly been cashing in their own holdings of the stock, escaping with tens of millions of dollars before the crash.
The editor of Today's CPA explains that the puff piece on Enron was put out in October before the full extent of Enron's corporate chicanery was known. But that's the problem with so-called business "journalism" -- it never seems to see, hear, or speak evil, even when they're interviewing it.
Three Choices: Dumb, Dumber, Dumbest
All 16 members of George W's hand-picked Social Security Reform Commission, chaired by the chief executive of AOL Time Warner, were chosen because each of them had sworn in advance that any proposal they come out with would include Bush's pet provision: Put part of people's Social Security retirement funds in the stock market.
This proviso, long pushed by drooling Wall Street brokerage firms and some of the right-wing think tanks they fund, is rationalized by their assertion that stock investments will always deliver higher returns to retirees than the guaranteed benefits paid by Social Security.
But aside from the fact that stock prices can plummet from $90 a share to 57 cents in about a year, as Enron's did, there's another little catch that Bush & Company don't advertise when they hype their plan to put your old-age money in the stock market: Fees. The big Wall Street investment firms are drooling over the possibility of getting their fat hands on Social Security because they'll pocket billions of dollars a year from the fees they would charge every time they buy or sell a stock with your money. These fees would come straight off the top of your social security account, drastically cutting the returns that you'd get.
Still, Bush's stacked commission dutifully issued not one, but three "reform" proposals, each of which contain the Wall Street giveaway.
These three proposals are the Larry, Curly, and Moe of Social Security reform. Don't buy the reforms of any Social Security commission unless it's made up of people who actually need social security when they retire.
Just Say It: 'You're Fired'
Once again, firing workers is all the rage in corporate America, as tens of thousands of bodies are being punted out the door each month. But Newhouse News Service reports that those in charge of these job massacres are having a difficult time with the firings -- not with doing them, but saying what they're doing.
It seems that CEOs of downsizing companies get all jittery about how stock-market analysts will take the firings, fearful that Wall Street will see mass layoffs as a sign of a sick company, thus knocking down the company's stock price, which in turn would whack the CEO's paycheck. Can't have that! So, corporate lawyers and PR flacks are spending countless hours crafting press releases that go through linguistic convolutions and contortions of logic to avoid saying the obvious.
Instead, the corporate spin doctors try to put yellow smiley-face stickers on the bad news. For example, Proctor & Gamble didn't fire 9,600 folks -- it announced an "Overall Plan to Restore Competitiveness and Growth." Never mind that 9,600 employees will not be part of that "growth." Likewise when KeyCorp offed 3,000 workers, its press release was headlined: "KeyCorp, Preparing for New Opportunities, Announces Efficiency Initiatives." Presumably the fired employees can find their "New Opportunities" elsewhere.
First prize for Orwellian Obfuscation, however, goes to Internet giant Cisco, which recently whacked 3,000 jobs, but rather than refer to the firings, gaily chirped that these people were part of the company's "involuntary normal attrition."
Maybe these PR deceits are fooling Wall Street, but they aren't fooling workers, who know they've been fired.
Jim Hightower's latest book, If the Gods Had Meant Us to Vote They Would Have Given Us Candidates, is available in a fully revised and updated paperback edition.