Malcolm Gladwell, he of Tipping Point fame, has authored this must-read New Yorker article on the demise of Enron. Although Gladwell gets a couple of things wrong, his article provides a refreshingly candid and objective view of what happened to Enron and highlights several aspects of the company’s demise that makes criminalization of the affair so troubling. Reading Gladwell’s account along side this earlier post on the case against Jeff Skilling, is there really any meaningful doubt that an enormous injustice has occurred in regard to the conviction and sentencing of Skilling to 24 years in prison?
By the way, these observations are quite interesting regarding a lecture that Gladwell recently gave in Dallas.
Daily Archives: January 2, 2007
Government Finance 101
In this post from almost three years ago, I noted the utter hypocrisy of Congress regularly vilifying big business for attempting creative financing mechanisms to hedge risk. So, over the holidays, this letter to Washington Post from the Comptroller General of the United States caught my eye:
The largest employer in the world announced on Dec. 15 that it lost about $450 billion in fiscal 2006. Its auditor found that its financial statements were unreliable and that its controls were inadequate for the 10th straight year. On top of that, the entity’s total liabilities and unfunded commitments rose to about $50 trillion, up from $20 trillion in just six years.
If this announcement related to a private company, the news would have been on the front page of major newspapers. Unfortunately, such was not the case — even though the entity is the U.S. government.
To put the figures in perspective, $50 trillion is $440,000 per American household and is more than nine times as much as the median household income.
The only way elected officials will be able to make the tough choices necessary to put our nation on a more prudent and sustainable long-term fiscal path is if opinion leaders state the facts and speak the truth to the American people.
The Government Accountability Office is working with the Concord Coalition, the Brookings Institution, the Heritage Foundation and others to help educate the public about the facts in a professional, nonpartisan way. We hope the media and other opinion leaders do their part to save the future for our children and grandchildren.
DAVID M. WALKER
Comptroller General of the United States
Government Accountability Office
Washington
Reviewing medical advances
Fresh off his fascinating article on Dr. Michael DeBakey’s confrontation with death (here and here), the NY Times’ Lawrence K. Altman reminds us in this article that — despite the dysfunctional U.S. health care finance system — medical advances are continuing at an increasing rate:
As a reporter for The New York Times for 37 years, I have witnessed many important medical events, from new treatments to new diseases. In reflecting on that panorama, it is clear that technology has accounted for the greatest changes in medicine. Technology has improved laboratory testing; allowed for the development of CT scans, magnetic resonance imaging exams and positron emission tomography, or PET, imaging to improve diagnostic accuracy; and produced new drugs and devices. Basic science, too, has deepened our understanding of disease, and much of that work depends on technology.
At the same time, the care for many ailments has been greatly improved by ancillary developments like better nursing care, newer antibiotics, transfusions of platelets to prevent bleeding, the insertion of monitoring tubes in major veins, and better organization of some services. [. . .]
Few people appreciate that medicine has advanced more since World War II than in all of earlier history. Newer drugs and devices and better understanding of disease mechanisms have vastly improved the care of patients. For male babies born in this country in 1960, the life expectancy was 66.6 years; for female babies, it was 73.1 years. In 2004, the figures, respectively, were 75.2 and 80.4. Medical advances account for much, though not all, of the gain.
Altman’s point regarding the importance of medical advances reminds me of a similar one that Donald J. DiPette, the chairman of the Texas A&M Internal Medicine Department, made while giving the Walter M. Kirkendall Lecture at the University of Texas Health Science Center this past spring. Given the advances in treatment of hypertension over the past 60 years, Dr. DiPette noted that President Franklin D. Roosevelt would have never been allowed to participate in the Yalta Conference at the end of World War II had his doctors known then what doctors knew a decade later about the traumatic implications of acute hypertension. In short, a better understanding of hypertension at the time of Yalta almost certainly would have changed the course of human history.
Is the WSJ sizing up Nabors?
Remember awhile back when longtime Houston-based Nabors Industries Ltd was facing Congressional scrutiny over its efforts to minimize its tax obligations by maintaining its registration in Bermuda (or was that Barbados?)? Well, that little dust-up may be nothing in comparison to what emerged for Nabors over the holidays.
Last week, the Wall Street Journal ($) ran this article reporting that longtime Nabors CEO that Eugene Isenberg is among the highest-paid corporate executives in history, receiving more than $450 million in compensation over the past 19 years, much of which was generated through the exercise of stock-option grants whose value the WSJ contends was enhanced by certain “controversial moves” made by the company. The WSJ article alleged that the company allowed Isenberg to trade in certain worthless options for new ones with lower exercise prices and “reloaded” Isenberg with new options when he cashed in others.
A day later, Nabors announced that it was initiating a further review of its option-granting practices in light of “issues raised” in the WSJ article. This current review follows an earlier internal review of the company’s stock-option practices since 1998 that the company contends “did not suggest that there was reason to question the propriety” of its option-granting practices.
Nabors has enjoyed a meteoric rise over the past 20 years or so, similar to that of another Houston-based company that the WSJ latched its teeth into awhile back.
Stay tuned.