07/19/2002

Reversing the Slide

QUESTION: Confidence in our economic institutions drops with every new revelation of accounting irregularities and corporate greed. How do we stop the slide? The average person works hard, earns a paycheck honestly and tries to invest wisely based on information from recognized experts. Yet those experts are now suspect. Then we see corporate executives get fired, receive huge buyouts and disappear into their mansions -- leaving their company's finances in a shambles. Aren't there laws against that? Where is their sense of responsibility and conscience? Why aren't they required to surrender funds for distribution to shareholders? Maybe if one of them did so voluntarily, people would feel more hopeful. What do you think?

ANSWER: I don't have definitive answers to these questions. I wish I did. I believe that the integrity of the vast majority of US businessmen and women will prevail. But I don't think anyone knows when excesses and corruption will finally be dredged up and wrung out to the point that we can rely on information in quarterly business reports, either in print or in the media. Both numbers and the people who report them are suspect these days – a sad commentary on our economic system and on our nation.

Personally, I think the turn-around will come from two directions: strong leadership at the top, in government as well as in business, and from a public groundswell demanding accountability. It is now clear that laws of corporate governance have been broken or blatantly ignored. Where existing laws have been broken, enforcement is needed —- swift, firm enforcement with responsible parties held accountable for their actions. Where laws are weak or ridden with loopholes, laws need to be strengthened and loopholes closed. Investors will refuse to put dollars at risk if corporate managers aren't held accountable for what they do with those dollars.

Average citizens will help stabilize the economy by doing what Americans do best – working hard, remaining productive, expanding knowledge and skills, paying down debt, and spending judiciously. Skepticism is healthy at this point. When company management makes grand claims about future profits, it's time to take a "Show me, don't tell me" attitude. Perhaps consumers will stage a retreat from corporate hype to do business with locals whom they know and trust.

The public can also demand change from political leaders at the polls. It's not easy to separate the promises from the convictions during political campaigns, but individuals can examine the promises politicians make and vote people out of office who fail to deliver on those promises. We need to hold our political leaders accountable, too.

We're a nation of intelligent, well-educated people. Yet we often let the "other guy" take action and make decisions. That's where the healthy skepticism comes in. Assign responsibility, to be sure, but watch closely and measure the results. If we look for and expect honesty and integrity from government and business leaders, while practicing it ourselves, we just might get it!

Readers, how are you faring in these tough economic times? What do you think will reverse the slide?

LINKS:

Crisis of Confidence

Voluntary Disclosure

Symposium for Finding Solutions

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Please send questions or comments to bbruno@snet.net.