MOMENTS INTO the drooling stage of my late-afternoon snooze last Sunday, I woke abruptly. I had fallen asleep watching the BellSouth Classic or the U.S. Senior Open or, well, some golf tournament anyway.
Now my screen offered something much more exciting. Three attractive young ladies with short shorts, backpacks, and hiking boots were making their way across a river . . . by walking on the water. Cool, I thought, I'd like to do that.
Moments later, their trick was revealed. A Jeep Cherokee came roaring out from under the muddy water, the girls thanked the driver for his SUV-as-a-bridge chivalry, and he sped off into the wilderness.
Wow, I thought, I'd really like to do that.
But just as I prepared to run to my local Jeep dealer, and then to the scuba shop, I noticed the barely perceptible writing at the bottom of the screen: "Not intended for underwater driving."
The legal disclaimer in this ad--this lifesaving warning against underwater driving--came to mind earlier this week when Dick Gephardt complained about the "deregulatory, permissive atmosphere" in which American businesses operate today.
The recent spate of scandals--Enron, Global Crossing, WorldCom, perhaps even Martha Stewart and ImClone--has spooked the markets. People are nervous. Talk in Washington centers around "restoring investor confidence." Gephardt and his fellow Democrats are positively giddy because they believe the scandals give them license to do two things they thoroughly enjoy: create new regulations and beat up President Bush.
Next week, the Senate will consider a bill offered by Senator Paul Sarbanes that would, among many, many, other things, tighten restrictions on accounting and consulting conflicts-of-interest and create a Public Company Accounting Oversight Board. People who know much more than I do about the markets and corporate malfeasance say there are some good things in the Sarbanes bill. But critics, such as Senator Phil Gramm, predict it will just create another layer of bureaucracy.
Legislative tinkering may make investors--and, more to the point, voters--feel better. But it does nothing to correct the larger problem. People lie, cheat, and steal. And when corporate CEOs lie, cheat, and steal, their crimes go largely unpunished.
"If you were to knock me on the head and steal my wallet, you'd stand a much better chance of going to jail for a long time than a CEO who commits fraud," says a lawyer who prosecutes corporate wrongdoing.
The WorldCom scandal, for example, appears to be a clear case of deliberate deception coming from the highest levels of the company. There are laws against this. But who really believes WorldCom CEO Bernard Ebbers will spend time in jail?
President Bush is poised to recommend stern new measures that take seriously the criminal conduct of corporate big-wigs. Rip-off investors and you'll be punished. This makes sense. The White House has thus far signaled its willingness to take a strong stand against these abuses without giving into the regulatory fervor in Congress. Strong talk of punishing corporate crooks can only enhance investor confidence and boost the markets. Loose chatter about a new tangle of regulation will almost certainly have the opposite effect.
R. Glenn Hubbard, chairman of the White House Council of Economic Advisers, made this point in an interview with the Mike Allen of the Washington Post. "It is equally important that we not so overlegislate that we raise the costs and burdens for legitimate businesses," Hubbard said. "What I worry about is a climate in which we broadly discourage risk-taking by creating the prospects of excessive litigation."
Markets, risk-taking, and excessive litigation--these things were already on my mind when I caught another TV ad. This one, for Ameritrade, features a talking bull and a talking bear having lunch at a diner counter. They engage in meaningless speculation about the direction of the market over the next year.
"Dow, five thousand. NASDAQ, eight hundred," says the bear.
"Interesting. Wrong, but interesting. Get this: Dow, twenty-five thousand. NASDAQ, eight thousand; give or take a grand."
Then, in an apparent effort to guard against lawsuits from investors who make bad trades based on the advice of talking animals in television commercials, comes the disclaimer: "Not indicative of actual market performance."
What was that about excessive litigation?
Stephen F. Hayes is staff writer at The Weekly Standard.
