As most regular readers of this newspaper know, I am fond of quoting that eminent jurist Judge Judy (Sheindlin).
“Don’t pee on my leg and tell me it’s raining outside,” is one of my favorite pieces of her wisdom.
Across from this page, you’ll find a column from Doug French. With the above quote in mind, I urge you to stop reading this, read Doug’s column, and then come back.
Here’s another quote, this time from John McEnroe.
“You cannot be serious!”
Let me preface this with the disclosure that I happen to agree with Doug French on many things (including general economic theory) and that I have great respect for his intellect. I also consider him a friend. But, right now, a friend in need of a common sense intervention.
There is a difference between libertarianism and anarchy.
And Doug has stepped over the libertarian cliff and fallen into the unedited for reality Austrian School of Economics.
To suggest that what Worldcom and Enron did were merely artifacts of “the New Economy” and the punishment of their officers with lots of jail time is out of line is to forget that your freedom to write such nonsense comes from our system of laws. The bedrock of that system is voluntary compliance and the cornerstone of voluntary compliance is respect for the system.
Not by economic theoreticians but by little guys like us.
Respect for our institutions—financial and otherwise—is important because you can’t have a cop on every corner. That respect is engendered by the average citizen’s belief that he’s getting a fair shake.
So when a cheap little thug like, say, Lance Malone bribes some equally cheap little thugs who hold public office to change a law which gets in the way of the euphemistically named “adult entertainment industry” the average guy—who is not Lew Rockwell or Ludwig von Mises or Friedrich A. Hayek, all theoreticians from the Austrian School of Economics—instinctively understands that what has happened is wrong.
You can make your economic point that perhaps these activities should not be regulated. You might even be correct.
You can also point out that many of the people who lost money in both Enron and Worldcom failed to read the balance sheets of those companies or they would surely have stayed away from them. And you would surely be correct.
But what happened in both the political bribery of Malone and the financial chicanery of, let’s call it WorldRon, was absolutely against the law. Two Federal juries have said so and now it becomes a matter of degree.
One of the most important decisions any Federal Judge can make is how best to establish that sleazebuckets like Malone (and Worldcom’s Bernie Ebbers) should not inspire copycats.
You may disagree with this but I believe that strong sentences after fair trials and convictions send a real message of deterrence. Just like the death penalty.
I also believe that it is not necessary to accept the concept of. “that’s the way things work in Vegas.” What that really means is that if we do nothing to stop it, government will always find a way to be corrupt. The price of reasonably clean government is threefold.
1) The voters set a standard of the way things should be. 2) The voters are eternally vigilant; and, 3) When the representatives of the voters (law enforcement) catch a miscreant like Malone, he is dealt with in such a manner as to make sure he and his ilk don’t do it again and respect for the system is restored.
Now you can quote the writings of the entire Austrian School of Economics but that’s not going to give us little guys an even shake unless we clothesline a Lance Malone and a Bernie Ebbers every once in awhile. There has to be some penalty for pure rapaciousness, despite the general theory espoused by many economic theoreticians.
I prefer the Missouri school. Sometimes you need to smack a mule upside his head with a 2x4 to get his attention.
That, with apologies to Ludwig von Mises, (and keep in mind, Mises died in 1973, so he never met Bernie Ebbers or Lance Malone) is what’s really happening here.