Wall Street and Welfare: The "W" Solution
July 15, 2002
With the wave of Wall Street scandals filling the news, it is easy to forget that welfare reform was supposed to be one of the top items on the policy agenda this year. President Bush wanted to make welfare mothers work more hours and he intended to offer them courses about the virtues of a good marriage. But this effort seems to have fallen by the wayside as tales of corporate crime take center stage.
According to the President, this wave of corruption is just the story of “a few bad apples,” but common sense tells us that the prevailing corporate culture is rotten to the core. Consider what is already known. Several major corporations—Enron, WorldCom, Global Crossing, Adelphia, just to name a few—were involved in major league efforts to deceive investors and creditors about the profitability of their businesses.
In each case, the rip-off schemes may have been the idea of just one or two bad apples, but these were large-scale operations. In each case, dozens, perhaps hundreds of people must have known that their company was engaged in activity that was at the least highly unethical, if not actually illegal.
So what did these people do? Did the executives at these companies go running to the Securities and Exchange Commission or the Justice Department to report the problem? Did they go to reporters at newspapers or business magazines who could expose the wrongdoing? Did any of them at least resign to avoid being complicit in crimes that they lacked the courage to try to stop?
The answer to all these questions is “no.” In this recent wave of scandals, there is not a single known case of an individual stepping forward to try to stop illegal or unethical actions by their company. The best we have so far is the statement of two senior executives at WorldCom, who were in on the largest accounting fraud in the history of the world, that they “considered resigning,” because they were disturbed by the deception – not exactly Profiles in Courage material.
While the individuals who were involved in some manner in these scandals may still be a relatively small portion of the business world, the obvious question is whether there is any reason to believe that they are different than the rest. In other words, is there any reason to believe that the bright and ambitious MBAs that went to work at Enron, WorldCom, and Global Crossing are any different from the bright and ambitious MBAs that went to work at Cisco Systems, Microsoft, General Electric, or hundreds of other companies? None of the poster children for this wave of corruption had a reputation for exceptionally unethical behavior prior to their exposure, so there is no reason to think that their top executives are more corrupt than the average.
This brings us to the “W” solution. We have a corporate culture with executives drawing six, seven, and eight figure salaries, who seem to care not at all about playing by the rules. At the same time, we have welfare mothers that the President thinks should be working more hours. Suppose we just replace the corporate executives with the welfare mothers?
This would take care of the welfare problem instantly. One year’s salary in these positions would provide more income than a dozen lifetimes on welfare. We would never see these people back on the welfare rolls.
Many will object that welfare mothers know nothing about running a large corporation. This may be true, but consider the other side of the coin. They will also know nothing about booking normal expenses as capital expenditures, tax havens in Bermuda, insider trading, off the book debt, and complex trading strategies to gouge electricity consumers. They may not even know about propping up company stock with their workers’ retirement savings. This sure sounds like a change for the better.
In fact, we might also place welfare mothers in the Wall Street brokerage houses. Presumably they won’t know about encouraging customers to buy the stock of the companies whose issues they underwrite. It’s also hard to imagine that they could do worse than a crew that managed to completely overlook the biggest financial bubble in the history of the world.
There is a clear need to send the corporate bums packing. If we can also get some good jobs for welfare mothers in the process, that would be an added bonus.
Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.