Wednesday, February 13, 2002

Enron fiasco: What to do, what to do ...

By DAVE HAMRICK
Editor-at-large

Watched a little of the Arthur Andersen auditing firm testimony on the Enron fiasco the other day.

Under intense and confrontational questioning, Andersen CEO Joseph Berardino yielded pretty much zilch in the way of enlightenment as to how Enron's misinformation slipped through Andersen's radar.

And what could he say? How about this ... "Mr. Chairman, big corporations hire auditors to go over their books because the government says they have to, and since the big corporation is the one paying the auditor, the auditor generally sees what the big corporation wants seen."

I've covered dozens of city councils and county commissions over the last 30 years, and I've sat through hundreds of meetings in which the auditor reports on the required annual audit, and not once have I heard that auditor say, "Your accounting is atrocious. You should fire your incompetent finance manager and get someone who can work a calculator."

No, I'm not saying auditors are crooked. Think a little deeper.

What you have here is just one example of thousands in which a well-meaning government tries to prevent bad things from happening to people by controlling what used to be known as the "free" enterprise system.

The world of science fiction is replete with variations on a basic plot in which robots or super computers are programmed with the overriding prime directive to do good for humankind and prevent harm to humankind.

Inevitably, the well-meaning programming goes awry as the anxious-to-please robots and super computers frantically build barrier after barrier to any human activity that may result in harm to humans, until humans are utterly enslaved by the doting machines.

There was a great one on the original "Star Trek" in which a computer that the people on this planet had come to think of as "god" monitored their every waking action and conversation, bringing great pain to anyone who said or did something that it thought might cause harm in some way. Spock, of course, had to mind-meld with the thing so he could use that Vulcan logic to override its programming.

Sorry if you're not a fan, but it's a perfect analogy for how our government has increasingly tightened the corset around our lives as representatives and bureaucrats try to fashion the perfectly safe society.

Social Security, welfare, paying farmers not to plant crops, gun control efforts, hate crimes legislation, GRTA ... I could go on and on, especially with examples of how an employer and an employee may come to an agreement in which both are perfectly happy, but the government steps in and says, "No, you can't do that. Our way or the highway."

They're going to keep squeezing us to protect our lives until there's no life left to protect.

I'm not saying reasonable rules for corporations to operate under to help prevent predatory practices and level the playing field are all bad. I'm just saying they're out of control.

As to how you get them back under control, in many instances that's something you'll have to ask someone smarter than me. I can't figure out how you unravel the giant regulatory ball of twine down to something that's reasonable, and then prevent those do-gooders we keep sending to Congress from looking at the new, streamlined regulations and coming up with new bright ideas for adding new layers of twine because a plane crashed somewhere or somebody got defrauded.

But there's one huge strand of twine I could yank out of there like that! (picture me snapping my fingers) if you would just elect me king for a day.

I would do away with that ridiculous labyrinth known as the income tax code and replace it with a simple flat tax. Everyone would pay exactly the same percentage of income. If you managed to gain a little success, your taxes would increase, but not exponentially - the percentage would remain the same.

But, you're thinking, corporate taxes would still be complicated, because you'd still have to depreciate assets and do all kinds of complicated calculations to figure out what your actual profit was, right?

Wrong. We will no longer play the three-card monte game of pretending there is such a thing as corporate taxes. Corporate taxes are paid by you and me when we buy goods and services. As king, I hereby declare that from now on when your government taxes you, you will see it in black and white on your own personal tax bill, and if you're mad about it you'll know how to correct it next election.

Would there be more Enrons if I were king? Probably. Sometimes you win and sometimes you lose. That's life.

If that scares you, try to remember this clichéd (but apparently not clichéd enough) advice: Don't put all your eggs in one basket.

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