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/ Out, Out are the Lights
A week has passed since the blackout. The investigations and recriminations have begun. Wayne Barrett blames
Governor Pataki. Some people see Energy Secretary Spencer Abraham as
a hapless loser, but they should blame him for his performance, not his appearance.
Ira Millstein chips in by saying that his study of the 1977 blackout, which came out one month before Mayor Beame left office, was ignored.
The search for blame, as I see it, reflects a classic cause of governmental
paralysis: divided Federal and State authority over utility companies and
transmission lines, with both separated from power over funding. The situation
was aggravated by deregulation, often implemented at industry's behest, and
without safeguards to assure maintenance of power supply and transmission
capacity. Recent public pledges to fix responsibility fall somewhere between Claude
Rains' shock at hearing that there was gambling in Casablanca and O.J. Simpson's
pledge "to find the real killer" of his wife. To start, look in the mirror.
The heavy hand of extensive and expensive lobbying by the energy
industry has, over the years, been effective in seeing to it that Congress
and the state legislatures do little or nothing to impose obligations or
expenditures on utility companies. Nor have the puny state regulatory
commissions maintained the vigilance they should; they are often embroiled
in complex rate increase proceedings, without supervising how the utility
is actually delivering power.
When Con Ed sheds its generating capacity, it becomes primarily
a buyer and seller of electricity. In my unsophisticated opinion, that
is ridiculous. If something goes wrong, responsibility should fall
on a large company, comprised of the people who actually do the work of supplying
electricity and gas. If the public gets ample and consistent electric
power, the utility should be rewarded, if not, it should be punished.
How can the public chase after companies we never heard of,
generating power in Quebec or some other remote forest. These companies
owe New Yorkers nothing, nor can we hold them accountable for failures.
Not good. How can you hold a local utility responsible for not delivering
power if it does not produce it? We do now have the right to buy energy
from a variety of companies, but to most consumers, that is a meaningless
choice.
On the other hand, telephone deregulation did bring real choice
and price competition, which has led to substantial reduction in costs, which
in times has generated increased usage. True, there are many failed
dot.coms as well as sinkholes like MCI-WorldCom and Global Crossing.
That's why we need a real Securities and Exchange Commission, and an alert
New York Stock Exchange, with enforceable standards for corporate conduct.
The excuse offered by those who have failed to regulate is often "that's
not my department", a line attributed in song to the German rocket scientist,
Wernher von Braun.
Notwithstanding the blackout, the epitome of corporate misconduct in
the United States must remain Enron. Despite strong competition from Kozlowski
of Tyco, Ebbers of WorldCom, and the Rigas clan in Adelphi Communications,
Enron remains the poster-boy of corporations for a variety of financial sins,
self-dealing, overstating assets, concealing liabilities through off the
books sleight-of-hand, etc. I wonder if the Ashcoft Justice Department will
ever bring "Kenny Boy" to trial, or whether that dire fate is reserved for
demons like Sam Waksal (who was at least trying to fight cancer) and Martha
Stewart, who sold when she got bad news from her broker, and allegedly made
the foolish mistake of trying to deceive the Feds about it. To make Martha
Stewart the symbol of stock market manipulation is not even close to reaching
the heart of the collapse of public confidence in Wall Street.
Nonetheless, the climate in American business circles has changed
somewhat for the better, thanks in part to the demise of Arthur Anderson,
a firm which was, under its founder, the gold standard in accounting.
Eventually, he died, as we all will, and the firm came under the control
of successively less scrupulous executives, which is the fault of the greedy
or unthinking partners that chose them. Anderson had been in so much
trouble with the SEC for other multi-million dollar misconduct before the
Enron case, that David Duncan's document destruction was deemed sufficient
cause to put them out of business. Do you remember that the top accounting
firms used to be referred to as the Big Eight? They now seem more like
Agatha Christie's mystery novel, "And Then There Were None," formerly "Ten
Little Indians."
Hopefully, we will maintain the higher standard: accounting
firms will be held accountable for the meaning of their reports, not just
the accuracy of the numbers that they certify. The phrase, "arguably legal",
so recently used to define what accountants will approve, should be relegated
to linguistic limbo, like "twist slowly in the wind" and "at this point in
time", the well-known words of Watergate.
Where do we go from here? Private industry is not composed
primarily of robbers and swindlers, nor is the public sector. There
is one difference, in that people go into business for personal enrichment.
This is legitimate and fair, and their efforts can create enormous value
for others. There are, however, many more situations in the private
sector in which one must make judgments as to what is ethical and appropriate
behavior, and what is not. In the public sector, the rules are simpler:
don't steal from your employer, don't accept money or valuable gifts from
anyone, don't sleep with your staff, and don't sell out the people you are
paid to serve.
I do not know how human behavior can be improved. The
fear of being hanged did not deter British pickpockets who worked the crowds who
gathered to witness public hangings. One could focus on 'character', which
is most important, but difficult to maintain in a popular culture of declining
values. Today lower-class media glorify crime, prostitution and sexual
violence, while upper-class media focus self-expression and self-indulgence,
often at the expense of what was called 'community standards'.
The conservative Alabama judge who wants to keep a statue of the Ten Commandments
in the Federal Courthouse, has been told to remove it by a Federal District
judge, and is subject to a $5,000 fine each day. Yet the Supreme Court
building in Washington has a frieze with the same ancient admonitions.
Go figure.
To conclude, the loss of power last Thursday and Friday can
lead to a trail of blame, which could ultimately encompass many of us.
Let us hope (and pray, if we can) that we receive reliable electric service
in a shorter time than it will take to reform the Universe.
Henry J. Stern is the director of NYCivic.