Jewish World Review July 25, 2002 / 16 Menachem-Av, 5762

Bob Tyrrell

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Consumer Reports

The congressional posse comitatus


http://www.NewsAndOpinion.com | Some money sages, witnessing the stock market's decline, are heartened that Congress is promising to apply therapy. They hear that Sen. Tom Daschle and Rep. Richard Gephardt are beating their hairy chests over accounting derelictions and corporate chicanery, and they let out a shout of gratitude. Others are less sanguine. They attribute part of the market's decline to Congress' promise to take action, a promise that the president endorses.

The doubters believe that investors are actually made apprehensive by Congress' promise to attend to corporate funny business. I side with the doubters.

What would Congress know about accounting rectitude? Is it not Congress that has turned Social Security accounting into a shell game? Is it not Congress that conceals debt with off-the-books sleight-of hand?

Jonathan Karl in The Wall Street Journal the other day told us that Congress has exaggerated government revenue by juggling accounts receivable. It has understated costs by "shifting employee pay periods to the previous fiscal year." It has even raided pension funds. Now Congress is going to reform corporate accounting and ethical lapses that began in the glorious 1990s, during the Clinton bubble that Congress was not particularly concerned about.

Moreover, the congressional posse comitatus that is charging in is led by politicians who have never had any experience in commerce whatsoever. Such brave reformers as Daschle and Gephardt are as innocent of business experience as they are innocent of investing experience.

To be sure, part of the problem with Congress reforming business is that it has so little experience in business. It has indulgently sat back and watched companies such as Microsoft be walloped by government for practices that have not only not hindered commerce but have actually encouraged commerce. In the chaos of the tech revolution, Microsoft's Windows operating system has actually given computers a standardization that enhances their ability to work with others.

Before the standardization of the railroad track bed, railroad commerce was limited to whatever track one was on. Computer use would be in the same fragmented condition without the standardization Windows has allowed. So government is harassing Microsoft with allegations of monopoly, notwithstanding the evidence that technological advances are rendering the government lawsuits irrelevant.

The problem with government reforming business ethics is that government's ethics are so dubious. Take the harassment of tobacco. If it is an evil, it should be banned. Instead of treating it as just another form of commerce or as an evil to be proscribed, government treats tobacco as an endless source of revenue, notwithstanding the fact that the tax falls disproportionately on the working classes.

The federal tax on a pack of cigarettes is now 39 cents. In New Jersey, a state tax of $1.50 is added. In New York City, a smoker is also clouted with a state tax of $1.50 and a whopping city tax of $1.42. Sixteen states this year have burdened the lowly tobacco smoker with the obligation of closing state budget deficits. The consequence is to turn every smoker into an unwitting tobacco bootlegger.

Then there are the multitudinous lawsuits initiated by state attorneys general against the tobacco companies. They reveal the states as little more than shakedown operations, and these operations are aimed not only at the tobacco companies but at any other industry that is exposed to our litigious masters, as Microsoft has discovered.

There is a trend here. Government is ferreting out unpopular pastimes and taxing them to pay for government's inability to live within its means. In California, there is a move afoot to tax junk food and candy for the good of government spendthrifts. Throughout the country, alcohol is seen as a likely target for tax increases. And in the end one has to ask, why?

If the politicians see tobacco, junk foods and alcohol as public health problems, why not put the matter to the test? Ask the electorate if we should institute a new Prohibition against these substances.

Yet the politicians are reluctant. Their ethical compasses are not that precise. And so they live by their ethically dubious tax increases and now promise to apply their superior judgment to corporate ethics. Not surprisingly, large numbers of investors are calling their brokers and telling them to sell.

Clearly when the bear market began, it was because the market was untenably high. But today, such economic sages as Arthur Laffer are arguing that the market is as much as 40 percent undervalued. And why might that be? Well, one answer surely is that government is riding to the rescue.

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JWR contributor Bob Tyrrell is editor in chief of The American Spectator. Comment by clicking here.

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03/07/02: My membership in the Communist Party U.S.A.
02/27/02: This award is bestowed by 'contrarians'
02/21/02: Mike Tyson: Made for Washington?
02/14/02: Enron as underdog?
02/07/02: Freed from the presence of money -- hard or soft -- most politicians would be just as bad
01/31/02: Needed: Bush to make a preemptive strike against his enemies . Ones who'd like to see him fail even during war
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01/03/02: Leaving the Nazis looking comparatively humane
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12/20/01: Calamities and unanticipated benefits
12/13/01: America's grief ought not to give comfort to those who caused it
12/06/01: Leahy, the strict civil libertarian!? A short-term exploiter of the Constitution is more like it
11/29/01: Welcome to Afghan, Maryland?
11/26/01: So, why don't more folks hate us?
11/15/01: America's quagmire and other certainties
11/09/01: No longer the smug statists, the prodigal Keynesians?
11/01/01: The New Seriousness
10/25/01: Bright lights and the Taliban
10/18/01: Is bin-Laden propaganda from Western intelligence?
10/12/01: No yellow ribbons
10/05/01: Bubba's back --- again!
09/28/01: Exposing peacetime's frauds
09/21/01: So protected, we're vulnerable
09/14/01: At Barbara Olson's home
09/11/01: Duh! All conservatives are racists
08/31/01: Arafat's terrorists have created their own hell
08/24/01: Time for some political prophecy
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08/10/01: Visiting the source of the White House braintrust
08/03/01: Morality and reality
07/31/01: Blinded by success?
07/24/01: The latest Kennedy capitulation in Massachusetts
07/13/01: Talk about tawdry
07/06/01: Delighting in the Dictator
06/29/01: The Godphobes
06/21/01: Fashionable Washington is sempiternally in a stew
06/15/01: The limits of hypocrisy
06/08/01: Flagging our general apathy

© 2001, Creators Syndicate