Remora

Adam Smith has presciently analyzed the peculiar psychological defects of Limited Inc. in this passage in The Theory of Moral Sentiments, concerning passions that derive from the imagination:

"Even of the passions derived from the imagination, those which take their origin from a peculiar turn or habit it has acquired, though they may be acknowledged to be perfectly natural, are, however, but little sympathized with. The imaginations of mankind, not having acquired that particular turn, cannot enter into them; and such passions, though they may be allowed to be almost unavoidable in some part of life, are always, in some measure, ridiculous. This is the case with that strong attachment which naturally grows up between two persons of different sexes, who have long fixed their thoughts upon one another. Our imagination not having run in the same channel with that of the lover, we cannot enter into the eagerness of his emotions. If our friend has been injured, we readily sympathize with his resentment, and grow angry with the very person with whom he is angry. If he has received a benefit, we readily enter into his gratitude, and have a very high sense of the merit of his benefactor. But if he is in love, though we may think his passion just as reasonable as any of the kind, yet we never think ourselves bound to conceive a passion of the same kind, and for the same person for whom he has conceived it. The passion appears to every body, but the man who feels it, entirely disproportioned to the value of the object; and love, though it is pardoned in a certain age because we know it is natural, is always laughed at, because we cannot enter into it. All serious and strong expressions of it appear ridiculous to a third person; and though a lover may be good company to his mistress, he is so to nobody else."

This must explain Limited Inc.'s obsession with the Enron story, which has engrossed our mind to the detriment of our pocketbook this week. Instead of seeking the easy money of book reviewing -- ah, reader, you can't imagine the veritable Golconda awaiting the lucky reviewer of Blah Blah Blah, the novel -- Limited Inc has been morosely pursuing an article about Enron's business press fan club, and the myth of efficiency. This article, once finished, will be shopped around hopefully to such outlets as Mother Jones, only to be rejected out of hand -- we foresee this already. But, in entire disproportion to the value of our contribution to the national culture (which consists entirely in summarizing forgettable plot lines), we are going to run in the channel of our obsession with with the same grim vigor Ahab once devoted to revenging his lost leg.

In any case, Andersen Accounting is becoming the (hopefully first) collateral casualty in this affair. In much the same way the Taliban fell when the US took action against Al Quaeda, Andersen is being rocked by its long collusion with Kenny Lay's grand scheme to make Enron, in effect, a giant energy derivatives hedge fund. Since Enron was a public corporation, such a scheme is illegal. But illegality, as any respectable contributor to political parties know, is in the eye of the beholder. Or rather, a particular set of eyes -- those belonging to the lowest stratum of our society. Of course, you know who I mean. I mean Congressmen, Senators, and members of the Executive branch. The Times this morning has an article about Anderson's reach in Washington:

Auditing Firms Gaining Muscle in Washington
By STEPHEN LABATON

Here are two grafs:

At the height of the fight between the industry and Mr. Levitt in the second half of 2000, all the Big Five accounting firms sharply increased their political donations and spending on lobbying. Andersen doubled its lobbying budget, to $1.6 million.

The investment paid off.

Among other proposals, Mr. Levitt sought to prohibit an accounting firm from performing both accounting functions and consulting services for the same company. That proposal threatened billions of dollars in revenues at the Big Five firms, and their defeat of the proposals in 2000 illustrated the industry's growing influence in Washington. Had the Levitt proposals been in place, it would not have been possible for
Andersen to bill Enron $27 million for consulting services last year while also billing $25 million for audits

There is also an article about Andersen's largess on the Public I site. This article names names.



"Last year, SEC Chairman Arthur Levitt, Jr. proposed a rule that would have restricted the amount of non-audit-related consulting work that companies like Arthur Andersen and other Big Five accounting firms could do for their audit clients. Andersen opposed the rule, and hired the powerful lobby shop of Clark & Weinstock to argue its case.

Among the Clark & Weinstock lobbyists working Capitol Hill on behalf of Andersen were former congressman Vic Fazio (D-Calif.); Jim Matthews, former chief of staff to Rep. Thomas Manton (D-N.Y.); and Anne Urban, formerly Sen. Robert Kerrey's (D-Neb.) legislative director.

Under pressure from the Big Five, the Commission ultimately adopted a weak version of the rule that favored the accounting industry and left their consulting services virtually untouched. The rule required only the disclosure of how much money the accounting firm earned for consulting services from each company it audited. No limits were placed on the amount of money an audit firm could earn.'

Both Public I and the NYT share the idea that campaign finance reform would cure us of a corrupt legislature; a legislature that was forced to forego bribery would then tackle reforming the regulation of the auditing industry with its eyes righteously peeled for the the public good alone.

Limited Inc grants the argument against legalized bribery. But we have strong doubts about the political reach of campaign finance reform. The reason the big five auditing firms can basically run over the SEC is that there is no political base for reigning in the big five, or for reigning in Enron. Populism has abandoned its war against Wall Street. A feature of the American political scene since the 1870s, it dried up in the 1980s. It is now the common wisdom that Americans don't get 'excited' about such things as regulating auditors. No, Americans supposedly get more excited about the list of Airline hostesses in Gary Condit's little black book.

But this consensus is oddly ahistorical. If the farmers of Nebraska, in 1900, could get passionate about specie and the intricacy of gold-backed, versus silver-backed, currency, are their descendents, in Southern California, really so degenerate as to not understand or care about financial markets? On the contrary, I think they understand very well, when they want to. Certainly they are as affected by the allowance of gross corporate corruption as their great-grandpas were by manipulation of railroad stock. But the stomach for class warfare -- and make no mistake, reader, Wall Street has never been reformed without a strong whiff of gunpowder in the air -- has gone out of both parties. Does anybody seriously see the pitiable Joseph Lieberman, who is currently leading the charge against Enron in the Senate, as a potential Danton? He is the most piddling William Jennings Bryan ever thrown up by the centrist Democrats, making Limited Inc nostalgic for Dukakis, for Christ's sake.

The last sad remnant of populism, in fact, resides in the Republican party's intermittent appeals to Christian fundamentalism. I could imagine an opponent of Billy Tauzin making a good case with the voters that the man is owned by the companies he is supposedly investigating. I could imagine such a case catching on. But the case would have to overcome two formidable obstacles. One, the media is resolutely opposed to class warfare. Except for the tepid admonitions of editorialists to remember the neediest on December 25th, the press and tv aren't simply bribed -- they are literally owned and run by corporations, and the law among them is, do not stir up class warfare. Period. The other obstacle is that facing any group which has suffered a string of defeats. The audience for populism is defeatist. Street realism very wisely counsels cutting your losses -- for pursuing your losses very quickly takes you over the edge. It is that realism that keeps most people from the ballot box. Apathy is a wise choice when there are no real choices.