On 16 February 2011, in two different areas of The New York Times online edition, there was some rather disturbing news about mismanagement of two different-yet-vital areas of our national economy. The first piece which caught my eye was entitled, “In Prison Interview, Madoff Says Banks ‘Had to Know’.” This concerned the accused Ponzi scheme heavyweight champion and Tsar, Bernard Madoff, and the alleged role of advanced knowledge among some banks involved in building his financial empire of deceit. The second was entitled “Auditors Find Federal Oil and Gas Oversight Still Lacking.” This concerned the Governmental Accountability Office (GAO) review of ongoing (mis)management of our strategic natural resources in the petroleum sector (crude oil + natural gas), in the wake of the Deepwater Horizon disaster, of 20 April 2010.
There’s an old saying from Ghana, in West Africa: “The downfall of a kingdom begins in the homes of its citizens.” Ghana has witnessed the rise and fall of many-a-kingdom over the past several centuries, so this saying has some weight with me. In the case of modern America, I might add that the downfall should also include a number of corporate boardrooms, government agencies, and (dare I say it?) a number of our “finer” educational institutions.
In short, we seem to have trained a large cohort of otherwise intelligent human beings to occupy leadership positions, but who have only the slightest, vaguest sense of a long-term national vision. Instead, they think and live in the very-short-term: in the quarterly business cycle, and in the 2- and 4- and 6-year electoral cycle. In the new epistemic world order of “measurable outcomes” this is where success is gauged, battles are fought, issues debated, and careers built. And in the process of collecting these narrowly-defined measureable outcomes, we seem to be ignoring if not actually devouring our long-term, collective future. Rome is burning; and our children will have only the embers of this once-great country to inherit, if this behavior continues. It is the sociological and historical equivalent of child neglect and abuse. I fear we have stopped caring.
I should add in the oft-used disclaimer, “if present trends continue.” Recent Earth-shaking political events in Egypt (and elsewhere in the Greater Mediterranean Sub-region) have proven, once again, that present trends need not necessarily continue. Here in the USA, one can now see a number of presently disturbing trends at the top of our society which should not continue. The protracted (and willful?) lack of strong oversight of some of our most vital areas of political-economic activity will eventually bring this country to its knees. The protracted lack of vision and dynamism needed for broad-based change and innovation will condemn this country to long-term mediocrity, or worse.
The New York Times article of 16 February 2011 started this way:
The Government Accountability Office, weighing in somewhat belatedly, has found the
Interior Department’s oil and gas regulation and revenue-collection offices to be beset by
problems and in need of a major overhaul.
The G.A.O., the investigative arm of Congress, added the former Minerals Management
Service to its list of so-called high-risk programs, saying that the service is unable to account
for potentially billions of dollars worth of oil and gas recovered from publicly owned lands and
offshore areas. The auditors found that the agency has problems hiring, training and
retaining qualified staff, lacks the technical resources to monitor drilling operations and may
be losing billions of dollars a year in royalty payments owed the taxpayers.
In short, at a time when the US Government desperately needs the cash, we—the taxpayers—still lack the proper government oversight to collect the revenues owed to us. These are monies legitimately owed from the extractive industries to which we lease our precious federal lands.
As if to sound conciliatory, the article concluded as follows:
The oil and gas program was the only government function added to the G.A.O.’s list of high-risk areas. Two programs were removed, the Pentagon’s personnel security clearance
program and the Census Bureau, which essentially has completed its 2010 data collection
work.
A number of other major federal functions remain on the watch list, some of which have been
there for years, including food safety, Medicare and Medicaid, financial regulation, tax
collection, weapons procurement, Pentagon contract management and protection of the
government’s information systems.
Okay, so how we pull in revenue from mineral extraction was the only area recently added to GAO’s high-risk category. Thank heavens for small blessings! Others have been on the “watch list” for years—including financial regulation. Yikes! “Rome” has been burning for a while, it seems.
On the topic of financial regulation (or the lack thereof) the Bernard Madoff article started as follows:
Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family.
In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking
noticeably thinner and rumpled in khaki prison garb — maintained that family members knew
nothing about his crimes.
But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail
exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in
his elaborate fraud, an about-face from earlier claims that he was the only person involved.
His sense of loyalty to family values aside, it seemed that Madoff was willing to mention that selected banks were allegedly behaving as co-conspirators in the fabrication of his weapons of mass deception. The article then meanders through a bramble of who said what to whom for a while—conveniently mentioning the author’s upcoming book on this very subject—before coming to this point at about the middle of the piece.
He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny.
“He cited a failure to conduct normal scrutiny.” That is all that was said about that: a failure to conduct normal scrutiny. That was it: a mere glance at the fundamentals of our political-economic system. The article then went on to describe more about who Madoff was working with to help recover some of the lost / stolen / swindled funds in the biggest Ponzi scheme in American financial history.
We seem to be suffering from a protracted case of SDD (“scrutiny deficit disorder”) in this country now. There is a world of something in all of this which, if we don’t get it under control, will affect our children and our grandchildren for decades to come.
What we need now is “extraordinary scrutiny,” focusing on how we have been conducting our large-scale mission-critical activities: in business, in government, and in education in particular. The downfall of a kingdom may begin in the homes of its citizens, but it is actually implemented elsewhere—in boardrooms, bureaucracies, and in classrooms. These are the areas that we must watch. These are the areas we must change. Our collective future depends on this.
Blaine Pope
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