Skip to comments.The government's War on Business (You're next)
Posted on 09/09/2002 3:43:32 AM PDT by from occupied ga
The War on Business
by William L. Anderson
[Posted September 06, 2002]
With the recent guilty plea of former Enron executive Michael Kopper, it seems that the floodgates are now officially open in the governments war against American business. Democrats are demanding something just short of summary executions, while Republicans and President George W. Bush are trying to outdo the Democrats in their anti-business rhetoric, and the mainstream news media outlets are playing the role of Joseph Goebbels in helping to stir the whole pot of hysteria.
From Ted Rall and the New York Times on the left to Fox News, the Washington Times, and Robert Novak on the right, people are being told that U.S. business officers and owners are crooks, charlatans, and threats to a free and decent society. Of course, the public is responding predictably, as pollster after pollster reports that Americans approve of arrests and more arrests of these alleged miscreants.
Unfortunately, this set of affairs has nowhere to go but downward, as the governments assault on business is going to have devastating effects, not only upon the individuals being arrested and charged with near crimes against humanity but also upon the future business environment in this country. However, many of the accused probably are guilty of little more than misreading the market or trying to keep their companys stock prices high against impossible odds (and protect themselves against a herd of class-action lawyers looking to sue when those prices inevitably fall).
Furthermore, as Novak pointed out in a recent column, high-profile arrests mean favorable publicity for U.S. prosecutors. According to Novak, James Comey, Bushs new U.S. attorney in New York City, will try to follow in the footsteps of Rudy Guiliani, the former New York U.S. attorney who parlayed his prosecutions of Michael Milken and Leona Helmsley into the mayorship of that city, and now makes speeches at 75 grand a pop. Writes Novak,
"Comey has not pleased Republican lawyers by insisting that accused corporate executives who had surrendered voluntarily be manacled and perform a well-photographed perp walk. However, the spectacle was enjoyed by the prosecutors boss: George W. Bush."
There is no doubt as to what Comey and his cohorts are attempting to do. By making it nearly impossible for anyone accused of fraud and other such crimes to receive a fair trial, or by piling on indictments--some of which are for activities that actually are legal according to U.S. law--dozens of executives will be forced to plead guilty and go to prison, often for crimes they never committed.[i]
At this point, I need to pause to answer the questions that many readers certainly will be asking: How can someone actually defend fraud?[ii] Furthermore, if people commit fraud, should they not have to go to jail for it?
Neither I nor any of my like-minded colleagues who write on these pages endorse the commission of fraud on any scale in any organization, be it business or government. However, before we sharpen our guillotines to lop off the heads of the accused, perhaps we should try to make a determination of how we define that word. Fraud, one would think, goes to intent, and, in the case of criminal law, means the presence of mens rea, or a guilty mind. In other words, in order to call something fraud, one must have intended to commit it in the first place.
For example, assume that I sell my old car to Joe. When I had it, the car ran well and I had no reason to suspect it would do otherwise. A day after Joe buys it, however, a belt breaks, or there is some other malfunction that costs him a bundle to repair. The question arises as to whether or not I have defrauded Joe. Had I known something was about to blow and did not inform him at the time of purchase in response to his questions, then I may be guilty of fraud.
But what if Joe comes to my house, asks me my selling price, then pays it on the spot without asking questions? If he did not ask about defects, am I obligated to tell him, anyway? (St. Thomas Aquinas outlined a similar situation in which a merchant sells wheat to starving villagers. Is he obligated to let them know more wheat is on the way? Aquinas said no, although he added it would be more virtuous of him to inform the peasants of the coming shipments.) It is obvious that, although it would have been nice of me to inform Joe of the cars troubles, I did not defraud him, since he had shown no interest in asking about the defects.
In the case of corporate executives, the issue is a bit dicey, but it is still possible to make sense of what might be fraud and what is not. For example, if the matter involves the gray areas of accounting, including the various categories in which one records assets and liabilities, often it is difficult to ascertain whether or not fraud has occurred, and one needs to apply the mens rea standard.
Unfortunately, the U.S. Supreme Court has slowly but surely worn away the protections of mens rea, which has been a boon to ambitious prosecutors. As Paul Craig Roberts has pointed out in his book The Tyranny of Good Intentions, large numbers of Americans each year go to prison for violations of laws or regulations of which they either were ignorant or disobeyed without any iota of criminal intent.
Yet, intent goes to the heart of the matter. Assume that I am driving my car carefully down a city street (at the speed limit) when a child suddenly and without warning jumps in front of me. I then hit the child and he is killed. That boy is as dead as he would be had I kidnapped and murdered him, yet in the former case, I killed him without any criminal intent, while in the latter case I would have committed a depraved act.
Any fair-minded person would object if a prosecutor charged me with first-degree murder for the first illustration, yet that is precisely what has been occurring in criminal justice in the United States, and especially in the federal system. For example, a number of people have gone to federal prison for violations of environmental law despite the fact that (1) they did not harm the environment, (2) they were acting in good faith, having received state permission, and (3) they were unaware of violating federal statutes until after the fact.
This latest anti-business jihad being conducted by various federal agencies is likely to follow the example of environmental prosecutions, in that many people are going to be prosecuted for what are alleged technical violations of financial regulations in which either there are gray area issues or the violation occurred without criminal intent. Both Congress and the White House, however, are trying to outdo one another in the category of who can demonize business executives most loudly, especially with critical congressional elections coming this fall.
When one includes ambitious federal prosecutors in the mix, along with a statist, lap-dog news media that operates as little more than a conduit for illegal leaks from prosecutors, it is not difficult to see just how poisonous the present atmosphere has become to any fair application of justice. What supposedly passes for a civilized court system in which one is assumed innocent until proven guilty beyond a reasonable doubt has turned into something akin to mob rule.
Furthermore, one should also ask the question of whether or not some of these cases actually belong in civil instead of criminal court. Over the last several decades, Congress has slowly but surely given over its lawmaking powers to judges and bureaucrats. On top of that, lawmakers have been moving situations that once were reserved for civil courts into the arena of criminal law.
Take the recent insider trading case with ImClone, for example. Even if we assume that the companys executives (and Martha Stewart) sold their stock on the open market knowing that the bad news regarding the Food and Drug Administration would quickly depress the stocks value, that ultimately is something that should be decided in the civil arena. If the purchasers of those particular shares of stock believe they have been defrauded, civil law gives them ample opportunity to seek redress in the same way that Joe could sue me if I were to defraud him in selling him my old car.
Making such issues criminal matters is harmful in many ways. First, it deflects the true direction of harm. Instead of real individuals having been hurt, we have the state claiming harm to the community. As Austrian economists such as Ludwig von Mises and Murray Rothbard have long pointed out, however, community is a fictitious entity. Only individuals can be hurt. By forcing the issue into criminal court, resources that might have been used to give redress to the victims of fraud are now being used by prosecutors and defense attorneys, and if the individual charged is found guilty, the government often seizes that persons property, making it impossible for the actual victims of fraud to be compensated at all.
Second, the expansion of criminal law becomes a tool of tyranny. When more and more activities are criminalized, in the end it means more ruined businesses, destroyed families, and increased financial burdens upon taxpayers, as they must pay for the expanding prison population. The United States already incarcerates more people than any other nation on the face of the earth (approximately two million, one-fourth of all the worlds prisoners), and the majority of them are in jail for non-violent offenses.
Because Congress and state legislatures have greatly increased the number and scope of the coercive tools used by the prosecution to gain convictions, we have also seen an increase in the number of innocent people going to prison.[iii] Given the current public outcry over the alleged business scandals, politically motivated prosecutors are working overtime to bring cases against hapless executives, many of whom at worst are guilty of technical violations of regulations and at best were operating in good faith, given the business conditions when they made their fateful decisions. And the present political climate ensures that most of these executives, guilty or not, do not stand a chance of receiving a fair trial.
No doubt, many ordinary people have applauded the recent perp walks that federal prosecutors such as Comey have forced upon arrested executives in attempts to further humiliate them. No doubt, many ordinary people have been angered at some of the heavily publicized alleged misdeeds of these executives, who supposedly have looted their own companies for their own gain. No doubt, many ordinary people have approved of throwing the book at those who are being charged.
What these folks do not realize, however, is that if prosecutors can roll wealthy and prominent people, illegally leak grand jury testimony with no fear of being prosecuted themselves, and conduct poisonous campaigns in the press that all but guarantee those currently in the dock cannot receive a fair hearing, then there is no limitation at all to state power. A government that can jail the rich and well-known at will and confiscate all of their assets is a government that can do the same thing to ordinary people--and at a lower cost to government officials. If people really want a prosecutorial state with no limitations, they will have their wish granted--and lose whatever precious freedoms they may still have. That is nothing less than a deadly bargain with the Prince of Darkness himself.
[i] For example, it is legal for businesses to use non-U.S. banks, but prosecutors often will charge people with money laundering in an attempt to increase the number charges in order to ensure an increased likelihood of guilty pleas.
[iii] As Paul Craig Roberts has noted, many people plead guilty even if they are innocent, since they lack the resources to fight the modern prosecutor, who often do not care themselves whether or not the accused is guilty or innocent.
Not that I expect any of the bushbots who pollute FR with things like "a day in the life of King George II" (gush gush) to understand this, or even disapprove of it if they do understand it, but hopefully not everyone feels that the election of a Republican liberal statist was the answer to the evils caused by the previous Democrat liberal statist.
It is difficult to say publically because dems are running attack ads like the one against Hutchinson accusing him of voting for tax breaks to be given to Enron. They are unsurpassed when it comes to public manipulation. They are equal with the Islamacist's and Hitler.
You are one of several people who have recently put forth the thesis that the Bush administration is going along with statist, unconstitutional things because of the political climate. I strongly disagree.
Have you heard of the principle of Occam's razor? Briefly put, it says that the most simple explanation is most likely the correct one. If it walks like a duck, quacks like a duck, looks like a duck, and craps like a duck, it is very likely a duck. Likewise if the Bush signs bills like a liberal statist, refuses to rescind EO's on gun control like a liberal statist, refuses to put the brakes on the alphabet soup of agencies who sole purpose is to remove our freedoms like a liberal statist, then he is a liberal statist.
Good news if it's followed. Do you have a link to the text of the EO?
Sorry to mess up your opinions with the facts, but Bush is a businessman. He has and will do nothing that would be harmfull. He is trying to improve the climate.
You must have some other issues because you are dead wrong on this.
This was in the news a few weeks ago. The dems attacked him for supporting more business welfare.
These lies are predominately due to Clinton era largess in the accounting field which is largely leftist and a democrat stonghold.(along with trial lawyers)
This is Clintons and the democrats doings. Bush is trying to reverse it and regain confidence in the markets. Accounting reform has been trditionally blocked in the Senate, where we have never had a majority to break a fillibuster.
Second, the expansion of criminal law becomes a tool of tyranny. When more and more activities are criminalized, in the end it means more ruined businesses, destroyed families, and increased financial burdens upon taxpayers, as they must pay for the expanding prison population. The United States already incarcerates more people than any other nation on the face of the earth (approximately two million, one-fourth of all the worlds prisoners), and the majority of them are in jail for non-violent offenses
Liberal, anti-freedom, criminal-enabling talking points...disgusting.
What facts would those be? You're the one without any facts. You have only stated your opinion - no facts.
Here are some facts for you. We have Bush signing the education and farm bills - two socialist pieces of legislation if ever there were. We have Bush's refusal to arm the pilots until presented with a veto proof majority in the senate. These are facts.
Why don't you blame him for global warming and the stock market like the rest of the Bush haters around this forum.
Why don't you claim the war is about oil or bailing out his old man's mistakes.
I'll be lurking around to respond to that too.
My my my how naive you are. What "political damage"? How would vetoing two pork laden rapes of the American public hurt Bush? His supporters would have cheered. His enemies would still hate him, but those conservatives in the middle would have come more into the Bush/Republican camp. As it is, his core supporters still love him (you can see their mindless droolings on the "day in the life..." thread). His enemies still hate him - he can't give enough of other peoples' money away to out squander and out plunder a Democrat. Core Democrats will always hate a Republican, no matter how socialistic he is. And those conservatives who were hoping for a change from the plunder and squander mentality in Washington are alienated. The political damage was done by Bush not vetoing those two bills.
Why don't you blame him for global warming and the stock market like the rest of the Bush haters around this forum.
I think "global warming" is a complete fraud perpetrated by socialists to try to expand government power (it's woking pretty well so far) and the stock market problems are due largely to government regulation and the fed.
Why don't you claim that Bush walks on water, raises the dead, changes water into wine? These are no more false than the claim that he is a conservative.
The farm bill was in fact a congressional boondoggle. Full of pork and french fries. I believe it was signed to appease certain congress critters for a yes vote on other issues in the house and Senate. It is likely that they screwed him. The situation has changed since.
There is no way any one person is going to be happy with the results of a congressional session. At present the margins are so close as to be meaningless. The dems are successful in getting there crap attached to half way decent legislation.
The Ed bill was carved up when dickhead switched parties and the bill was rushed through the Senate. Controls and testing that the dems fought tooth and nail did get through for the most part. If ed doesnot improve I suspect a major overhaul of the dept. will finally take place.(assuming Bush gets 4 more and we get the Senate back.
For the most part, he has done well on domestic issues. I give him a B, considering the heavy opposition. Government must now go into a economy mode to get out of deficit and pay for the WOT. We shall see.
Apparently you did not study Bush's record as governor prior to the election. I did and he is not surprising me.
He was known as being flexable but firm and a deal maker with the democrats.
No surprises. I expect the veto pen to warm up a little, now that attempts to negociate have been shot down by Dasshole.
What difference does his record as governor of Texas make? It's his performance as president that is of concern now.
LOL! Now who is naive?
Gotta love the New Deal.
Taking his record a governor into account is like paying attention to campaign promises. It's what he does now that is relevant, not what he said or did in the past
"Good news if it's followed."
Sorry but you overlooked the obvious problem. "Federal agencies" should NOT be writing rules and regulations un-checked...The EO should have stated such.
Nice catch. I agree.
I am trying to make it as clear as I can that your comlaints and grievences about president Bush are falling on deaf ears. He is doing exactly as he promised.
Obviously. None so blind as those who will not see; none so deaf as those who will not hear.
If all you want is a Republican liberal instead of a Democrat liberal, then you have what you want.