ORIGINALLY POSTED ON THE HUFFINGTON POST
Last weekend’s shenanigans in Washington should have you convinced that the inmates have now taken control of the asylum. This surrender to the Tea Party means more cuts to the very social services so badly needed by the more than 14 million Americans who are unemployed and by their families. And that’s just the first step on the downward slope to follow.
But if you need any more convincing that something is going terribly wrong in the economy, here’s a very quick look at three other signposts which appeared this week.
1. The New York Times‘ Steven Davidoff wrote a fascinating article about what has happened to the corporate directors of Enron in the years since that company collapsed in 2001. Far too few reporters do this kind of reporting — going back to a story that once dominated the headlines but has since faded from the limelight. (I’ve been a journalist for nearly thirty years myself.)
His conclusion is blunt and depressing: “Do the former directors of the institutions that collapsed during the [recent] financial crisis have anything to worry about? If the experience of Enron is any example, the answer is a resounding no.”
Davidoff looks at where the folks who were responsible for the oversight of Enron have ended up and the public record shows that they’ve “recovered nicely from the scandal.”
In the light of what’s happened over the past three years on Wall Street, Davidoff’s analysis of corporate responsibility — and culpability — leads him to conclude that we’re deluding ourselves to expect improvement in behavior from the financial markets.
“The trend also underscores the decline in the importance of reputation on Wall Street — even since the time of Enron. Prior bad conduct simply is often not viewed as a problem.”
2. On Monday, the National Bureau of Economic Research published a new paper by two academics who examined the connections between companies that find themselves in public trouble and their subsequent investments to burnish their public image.
“Corporate Social Responsibility for Irresponsibility” (PDF) is based on the analysis of a 15-year record of behavior by roughly 3,000 publicly traded American companies of all kinds.
Their conclusion: “When companies do more harm, they also do more good.”
I suppose you could twist yourself into an elaborate knot to argue that there is a silver lining in that statement, but in the light of how little responsibility those at the top take for their corporate misadventures (see 1. above), the authors added a kicker.
It turns out that when companies find themselves in hot water because of growing public concerns regarding some aspect of their corporate governance, their response is to invest, consistently, in “corporate social responsibility [programs] in other dimensions, rather than reform governance itself.”
In other words, they avoid dealing with the fundamental problems at the top. Surprised?
3. Finally, I was involved in a very interesting blog discussion this week about recent writing I’ve done about very successful American companies that promise their employees that as long as they work hard, they will never be laid off.
It’s not an easy management style to embrace in any economic climate, all the more so in these slash-and-burn times. There are many challenges — and some dangers — in bucking conventional economic wisdom. Yet firms such as Lincoln Electric, Hypertherm and Southeastern Freight Lines have honored these promises for many decades while remaining exceedingly profitable and innovative.
You’d think that with so much financial and personal devastation in the news, there might be a sense of enthusiasm for at least exploring how and why these firms operate year-after-year.
I was struck by exactly the opposite conclusion of many of the comments, including senior academics from the MBA world.
To wit: “I don’t think a recession is the right time to be encouraging firms to retain workers. What the economy needs most is deleveraging and restructuring across sectors… in a dynamic, growing, innovative economy, we want entrepreneurs to be able to direct resources (including labor) to their highest-valued uses, in response to changes in consumer demands, technology, etc.”
So there you have it.
A lack of responsibility from those in power… spending money to put lipstick on a pig… and once again, downplaying the terrible jobs crisis.
Doesn’t encourage much hope, does it?