The alarm raised by mainstream economists that corporate cost cutting will undermine the real foundation of the economy is based on a flawed view of the essence of savings. On the contrary, writes Frank Shostak, cost cutting is an important means in correcting previous erroneous decisions so that real wealth can be generated again.
Martha Stewart, one of our most productive citizens, is being targeted for destruction by our most unproductive entity, the federal government. To understand the law of insider trading, writes James Ostrowski, you have to be a real insider. Yet, ignorance of the law is no excuse (unless you are a judge).
The Dow would be several thousand points higher, were it not for government regulation that causes corporations to divert immeasurable resources to pandering to government regulators rather than pursuing profits. A major ingredient of stock prices is expected profitability, writes Thomas DiLorenzo, which regulation affects profoundly.
News reports now indicate that WorldCom's overstatement of its profits in the last few years may exceed initial reports. But, writes George Reisman, whatever the ultimate figure may be—$7.1 billion or even $10 billion—it pales into insignificance in comparison with the overstatement of profits regularly engineered by the U.S. government.
The combination of collapsed pensions and accounting scandal is operating like the collapse of a dam, unleashing a torrent, not of water, but of hatred--hatred of capitalism and its most visible and valuable representatives: big businessmen. George Reisman counters propaganda with analysis.
The same politicians who cannot remember the names of major corporations pretend to understand accounting while they are preening before the television cameras, writes James Sheehan. If these solons really knew how misleading corporate accounting was, surely they would have acted to correct the problem before now.
There is a way out of the current economic mess, writes William Anderson: Stop the government merry-go-round. Malinvested resources must be permitted to be liquidated, government spending must be cut back, and the central bank must not try to "reflate" the currency or the stock market.
Contrary to popular thinking, the stock market does not have causative powers as far as economic activity is concerned. The prices of stocks only reflect individuals' assessments of economic reality. And while individuals can change their evaluations of economic facts, writes Frank Shostak, they cannot alter the facts themselves.
Insider trading laws, writes Dale Steinreich, have empowered the SEC to undertake a mission in information egalitarianism that favors certain classes of investors and strategies, and not others. Martha Stewart and ImClone have the book thrown at them, while the stock sales of Apple Computer's executives are ignored.
Last week, headlines around the world were screaming out the sad tale of WorldCom and its $4 billion or so misstatement of earnings. But should we really be surprised that another poster child of the boom--especially one whose growth has come through rapid-fire acquisitions led by a rock star CEO--has been revealed to be a hotbed of malpractice?
