People's Democracy

United States: A Rotten State

Ardhendu Dakshi

THERE is something rotten in the state of Denmark - Shakespeare unfolds his classic tragedy, HAMLET with these comments. Today, on one hand one watches the tragedy  that have befallen on the millions of workers and ordinary households and, on the other, the ugly, dirty, greedy faces of corporate big-wigs across the length and breadth of United States. The stinks make it too obvious that Shakespeare would have called it a ”rotten state, no doubt of it,  rotten to the core”.

George W Bush, in his speech in the Wall Street, the centre of American Corporate World emphasized that “The business pages of American newspapers should not read like a Scandal Sheet”. But it indeed reads like a scandal sheet and the scale of fraud, jugglery of accounts, usurping of huge public money, as the reports are pouring in, surprises  John Galbraith at 93, that he could never imagine of this to happen.

There was a ripple of disbelief when Enron collapsed early this year and people took it to be an aberration, a crime committed by some individuals, Kennerth Lay & Co,  and they retained their confidence in the American  corporate governance and its checks and balances. Post Enron America was going on `as usual’.

THE DELUGE

This confidence proved to be  short lived. Suddenly came the case of WorldCom whose god-fearing, church going Chairman Bernie Ebbers had lied and cooked the accounts of one of the largest Dot com companies showing huge profits when it was actually at  loss and had a 30 billion dollar loan to pay. Xerox is a more familiar name to us here. Now it is exposed that it played all dirty games like juggling the accounts, bribing the government officials taking huge loans by top company officials and so on. Suddenly the list is endless. Kmart, Tyco, Global Crossing, and many other companies of the `Great Society’ of America are reported to have defrauded the banks, the people, the government to a scale never heard before.

THE GREAT TRAGEDY

Those company directors conspired on the board room tables to cheat everybody else and earn fat,  money for themselves. It has good news value, sensational and awful. But who cares to visit the kitchen tables after all that has happened. The tragedy is unfathomable. Motorola has cut 60,000 jobs, Enron cut 30,000 jobs, Anderson about 10,000, Tyco eliminated 15000, Hewlett-Packard 19000 jobs, the dot coms have together cut 150,000 jobs in last 2 years. The workers lost their jobs and most of them lost their pension  as the corporate big bosses misused the pension fund also.

Millions of share holders have nowhere to go. Enron is bankrupt, World Com's 65 dollar a share now sells below 20 cents, Xerox shares came down from 60 dollar to 5 dollars now. The losses are huge and millions of shareholders and thousands of  workers feel cheated because there is no law to protect their interests. Soviet system was `bad’ because workers had assured jobs, assured incomes, assured health care, assured education and top of all, assured pension with full pay for the rest of life. So, Soviet Union was corrupt and American Corporate world is innocent, people were made to believe all these decades, by western propaganda.

Joseph Stiglitz, Nobel–laureate economist writes “.. of late, there has been much discussion of corruption in the public sector of many developing countries. It was inevitable corruption of public servants that in part, made it important to privatize in developing countries. Advocates of privatization also lauded the private sector’s ability to compete. But I am not sure the private sector advocates quite had in mind the abilities of American Corporate capitalism has demonstrated so amply: corruption on an almost unfathomable scale. They put to shame those petty governmental bureaucrats who stole a few thousands dollars or even a few million. The numbers bandied about in the Enron, World Com scandals are in billions, greater than the GNP of many countries.”

Capitalism is driven by unlimited greed. The captains of modern day corporate world cheat everybody, people and government’s of other countries, government of own countries, (though known as  multinational, their moorings are quite obvious) and their own people. These frauds are fearless because they have purchased the political leadership who matter or have themselves usurped political power through legal or dubious manner.

George W Bush

George W Bush, president of United States of America rushed to Wall-Street to instil confidence in the American System and threatened 10 years imprisonment for committing fraud.  We are sure that nobody will go to jail, may be one or two low level executives because Enrons or WorldComs pay huge donations to both Democrats and Republicans.

Beyond that, if the laws are to be followed strictly, then George W Bush, Dick Cheney should be in jail right now.

Bush sold his shares of his Texas base company Harken Energy when it became clear that the company would go bust. He got about a million dollar and after two weeks the company sank. This is called : “insider trading” and he did not inform the Security Exchange Commission (like India’s SEBI) about the deal for a long time. Vice President Dick Cheney had shown 100 million dollar false profit for his company, Halliburton of Dallas, in 1998. It is a clear case of fraud on accounts and he was Chairman-cum-CEO of that company. 5-year jail term was already there in the law for such frauds, but nobody has been jailed.

One pertinent question is often asked – why did they resort to such fraudulent practices for so long and why are those misdeeds exploding this way now, all of a sudden?

In fact, all the 4 concerned parties in the whole game have vested interest in cooking the accounts and  fudging the balance sheets.

1)     The Chief and senior executives get their fat salary and huge bonus and also bonus shares (stock options) on the `performance’ of the company. So, profits “have” to be shown, share values “must” go up to ensure even better pay, more bonus and more shares that can be sold in the market at higher price.

2)     The auditors are also “Business Counsels”. Anderson got 10 million dollars for auditing Enron and 60 million dollars for business advice. This “advice” is how to cook the accounts and show profits even when there are losses. This arrangement makes the Board Rooms happy, both company’s and the auditor’s.

3)     Billions of dollars are pouring in American stock market, Wall Street, NASDAQ, Dow Jones, not only because it is the centre of world capitalism but also here one can make big money in trading shares. American government wants this money to come in, or else, American economy will face balance of payment problems or may even collapse. So government has direct interest in the companies showing higher profit, and attracting overseas money in stock market. Government wants to show American companies posting good profits.

4)     The cheer-leaders of capitalism, the stock-market experts, counsels, economists want to create an atmosphere of hope so that small investors flock around with their money. They mislead the people and get commissions. Even in the worst time, they “predict” that economy will soon recover and entice people to buy the shares.

WHY

NOW?

The only explanation is that, none of the operators could afford to admit that `globalisation’ was failing. More and more countries are going bankrupt, revolutionary IT technologies are mismatched to ground realities in most countries, e-commerce and dot com bubbles have burst, everywhere job cuts are severe and disposable money is less and less, uncertainty is ruling supreme. Still all the four operators wanted, by arrangement, to keep the facts under the carpet, hoping for recovery. But nothing helped them. No longer could they keep the dirty things secret.   All the colour, sheen of the image of capitalism is gone, the ugly faces are out, after the  deluge  of scams.

VIOLENT YEARS

AHEAD

All these events unfold the reality, a broader crisis of capitalist system. The attempts of the corporate ruling elite to cover and mask the crisis by creation of volumes of fictitious capital have failed. “Globalisation’ does not invoke hope anymore to the believers.

The American ruling elite will be more violent now. They have great stakes in keeping things running in the way they want. Things, as are unfolding, are threatening them and America as a super-power. So the attacks on the living standards and democratic rights of the workers will be intensified, national governments, particularly those of developing countries will be undermined. Worse, only a widespread violent situation  can distract peoples attention from all these misdeeds. So political turmoil is most apprehended, more in the developing countries, created by George W Bush and company.

Hopefully worldwide awareness is also growing and the working class, however denigrated by others, are spearheading the struggle against this globalisation and corporate hegemony. We will have to win or history will not forgive us.