Altes Elliott-Wellen-Forum - Punishment: Public and Private / Interessanter Artikel

Punishment: Public and Private / Interessanter Artikel

verfasst von JüKü, 28.06.2002, 16:38

http://www.mises.org/fullstory.asp?control=990

Punishment: Public and Private

 

by Christopher Westley

[Posted June 28, 2002]

[img][/img] What's
the difference between the cultures of the private sector and the public sector?
Consider the difference between Arthur Andersen and the U.S. Forest Service.

A jury has announced that Andersen was guilty of one felony
count of obstructing the Security and Exchange Commission’s investigation into
the Enron Corp. Although the government’s prosecutors have been loudly
proclaiming the great job they did, in truth they won this case by a whisker. The
jury discounted the testimony of the prosecution’s highly touted star witness,
former Andersen employee-turned-turncoat David Duncan, in acknowledgement that
his words were bought by the state in exchange for immunity. His entire
contribution to the case turned out to be much ado about nothing.

What became important to the jury, however, was a single email
by a Chicago-based Andersen attorney named Linda Temple, far away from Enron’s
Houston headquarters. Last October, Temple urged another Andersen employee
to edit a file memo"to protect ourselves" from SEC regulators. Under
the law, this small shred of evidence proved to be sufficient to hold Andersen
criminally responsible.

Not that this matters to Andersen’s future. The
government’s surprisingly light penalties against the firm—the maximum
sentence is five years' probation and a $500,000 fine—simply underscore the
irrelevance of the government’s attempt to enforce its regulation. Andersen
has long since paid the price of market regulation, as Forbes Magazine’s
"Andersen
Defection Directory" shows. You can stick a
fork into that accounting firm.

Why don’t we see the same outcome with the National Forest
Service? Consider, for instance, the record-setting fire that has raged in
Colorado, scorching well more than 130,000 acres of land in three counties
and forcing thousands from their homes. As Andersen’s culpability can be
traced to Linda Temple’s email, so can the Forest Service’s culpability be
traced to Terry Lynn Barton, a technician who was paid, ironically, to patrol
the Pike National Forest to warn campers against starting fires.

On the same day that the Andersen verdict was announced, a
repentant Barton confessed to investigators that she started the fire (whether
accidentally or maliciously, we do not know). Federal prosecutors asked the
judge not to allow Barton to post bail because they feared she might flee the
area. "She would return to a community in which there is considerable
hostility towards her, which adds to the possibility of her being a flight risk,"
said U.S. Attorney for Colorado John W. Suthers.

One would think that the system that causes fires such as the
one raging in Colorado would be called into question as much as the corporate
culture of modern accounting has been called into question following the Enron
debacle. After all, these fires have turned into annual events, occurring
primarily on public Western lands.  

Besides damaging the landscape, they ruin private property and
place individuals in serious and immediate danger. No one has accused
Andersen or Enron of causing such damage, and yet the damage they did inflict
was sufficient to bring down both firms. And yet, the future of the U.S.
Forest Service seems secure. Why the difference?

The answer can be traced to property rights, and it explains
why market outcomes are always held to a much higher standard than public-sector
outcomes.

As private-sector firms, Enron and Andersen are ultimately
responsible to consumers, and firms that persistently fail in satisfying
consumer demand eventually fail (unless they receive protection from the state). Enron
made bad investments, and Andersen provided poor-quality information, and the
market responded so that both firms are shells of their former selves. Firms
that do not utilize resources which maximize the social good eventually face
some market penalty.  Enron and Andersen’s penalty has been harsh.

Individuals who operate the U.S. Forest Service, on the other
hand, do not stand to receive direct, long-term benefits (or damages) >from
the proper (or improper) utilization of the resources placed under their command. This
guarantees that these resources will rarely be utilized in ways that maximize
the social good. In fact, while a major-yet-rare scandal such as
Andersen’s can bankrupt a firm, a major-yet-frequent scandal such as
uncontrollable forest fires on public lands may serve as the basis for enriching
a public-sector bureau like the U.S. Forest Service with even more tax dollars. Talk
about perverse incentives!

These incentives don’t exist where property rights are
enforced. In the South, where I live, forestland is every bit as plentiful
as in the West, yet it is rare for forest fires to reach the same proportions as
they routinely do on public lands. And why should they? Down here, the
land is primarily privately owned, and private foresters have huge incentives to
maximize its long-term benefits. The obvious solution to the fire problems
on Western lands is to sell them off to private owners and allow them to utilize
them as they see fit.

If they did, then firms that managed forests in the same
manner as the U.S. Forest Service would not last. The administrative ethos
that attracted employees like Terry Lynn Barton would see the same fate as that
which attracted employees like Linda Temple. The high standards for performance
in the market could finally address the scandals of public-forest management.

<hr align="left" width="33%" SIZE="1">

Christopher Westley is an assistant professor of economics at
Jacksonville State University. See his Mises.org Articles
Archive and send him MAIL.



<center>

<HR>

</center>

Thread gesperrt

gesamter Thread:

Punishment: Public and Private / Interessanter Artikel - JüKü, 28.06.2002, 16:38