Congress must battle spyware and adware

Lee Drutman: Congress must battle spyware and adware

01:00 AM EDT on Friday, June 24, 2005

BERKELEY, Calif.

PERHAPS the following scenario sounds familiar. After downloading a new program, you start to see pop-up ads everywhere. The ads are relentless, promoting all manner of useless and even insulting products.

Try as you might, you can't stop them from invading, and hijacking your ability to use your computer in peace and quiet. Perhaps you also notice that your browser home page has been changed, with your browser favorites replaced by links you never would have selected in a million years.

And, perhaps most insulting of all, you get an ad that asks whether you are tired of the pop-ups. It promises to free your computer from their maddening grip for just $50.

If this sounds familiar, you are not alone. If it doesn't, it probably will soon. A 2004 survey by America Online and the National Cybersecurity Alliance found that 80 percent of people surveyed had some kind of spyware or adware program on their computer. (Generally, spyware refers to programs that monitor your computing activities, potentially stealing sensitive information; adware refers to programs that merely launch pop-up ads.)

Both of these programs are disruptive and sometimes destructive. They slow our computers, create frustration, and, if left unchecked, could render the Web virtually uninhabitable.

In short, somebody ought to do something about this. That somebody is, of course, Congress.

Actually, the House recently passed two bills dealing with the problem. One, the I-SPY Act, would toughen criminal penalties for spyware activities, although it ignores adware. The other bill, the SPY Act, would also toughen penalties for spyware, but would essentially make adware legal, by carving out protections for opt-in programs. A related bill is moving through committee in the Senate, and if approved, a compromise bill could become law this year.

Yet it's far from clear that what Congress is proposing would do the trick. The problem with the opt-in approach is that almost none of the adware programs are up-front about what they're doing. They bury the user's consent deep in the lengthy legalese of the terms of agreement, which Internet users "approve" when they download unrelated programs. According to the recent National Spyware Survey, sponsored by Unisys, 61 percent of respondents didn't remember consenting to adware.

One solution would be to require adware companies to be straight with potential downloaders: "If you download this program, you will be bombarded with pop-up ads."

The difficulty in dealing with adware is, of course, the advertisers, who aren't afraid to fight for the right to pester you till you throw your computer out the window.

At a recent Senate hearing on spyware, the executive director of the Network Advertising Imitative, J. Trevor Hughes, put it diplomatically: "Our responses to spyware must carefully balance our need to aggressively meet the threat, while protecting the continued legitimate use of a channel that is beginning to show its true promise. We must also be wary of spyware legislation that inappropriately includes online privacy standards."

The more thuggish approach comes courtesy of the Web-advertising firm WhenU, which last year sued after Utah enacted the country's toughest anti-spyware law. WhenU -- whose software tracks the Web sites a person visits and then sends the person targeted ads -- successfully asserted that the Utah law was unconstitutional, on the grounds that it interfered with interstate commerce and restricted freedom of (commercial) speech.

Utah has since enacted a toned-down anti-spyware law, but is still bracing itself for legal challenges.

Unfortunately, the legislative strategies that are emerging show that lawmakers aren't willing to do battle with advertisers. This was exactly the mistake that Congress made two years ago with its CAN-SPAM Act, which was supposed to deal with the problem of spam: unsolicited e-mail. The law served only to make deceptive e-mail illegal -- clearing the way for hopeless amounts of all other e-mail.

Spam thus continues unabated. Experts estimate that some 75 percent of all e-mail is spam -- about 15 billion messages a day -- costing businesses tens of billions of dollars a year in lost productivity.

Legislators now have a chance to do better in dealing with the latest threats. If Congress is serious about letting the Internet develop as it should, its members should take a tough line on both spyware and adware, and be far more willing to stand up to greedy advertisers.

If Congress doesn't do this, the Internet could become a lot less habitable a place in the near future.

Lee Drutman, a frequent contributor, is the author of The People's Business: Controlling Corporations and Restoring Democracy (Berrett-Koehler).

http://www.projo.com/opinion/contributors/content/projo_20050624_24lee.1a47dc3.html

Cox In The Henhouse

Cox In The Henhouse

Lee Drutman

TomPaine.com

June 10, 2005

Lee Drutman is the communications director of Citizen Works and the co-author of the book The People’s Business: Controlling Corporations and Restoring Democracy.

In Washington this past week, leaders of Delta Air Lines and Northwest Airlines told a Senate panel that they didn’t have the money to cover the pensions of 150,000 workers and retirees, and that they’d probably go bankrupt on account of it. If so, they would join their troubled competitors, U.S. Airways and United Airlines, who also broke their pension promises to thousands of employees and then turned to the government to cover at least part of the difference. (At $10 billion, United’s pension default is almost as big as WorldCom’s record-setting accounting fraud—though for whatever reason it has hardly produced the same uproar.)

These latest pension failures come closely on the heels of the resignation of William Donaldson as the chairman of the Securities and Exchange and the speedy nomination of free-market ideologue and corporate sycophant extraordinaire Rep. Christopher Cox, R-Calif., to be the agency’s new head. Though the two events are certainly unconnected on the surface, both bode poorly for the ability of hard-working Americans to enjoy an adequate retirement.

The fact that more and more companies are unable to provide promised pension benefits is troubling for obvious reasons. According to the Pension Benefit Guaranty Corporation, the taxpayer-funded agency responsible for providing partial insurance on corporate pensions, pension plans for 15 million employees at 1,108 major companies were underfunded by $353.7 billion last year, up a whopping 27 percent from the year before. That’s a lot of workers who are unlikely to get their promised retirement benefits.

The bigger and even more significant trend, however, is not the companies who are unable to provide. It is the companies who are simply unwilling. Over the last two decades, there has been a steady erosion of guaranteed pension benefits and a steady rise of corporations instead giving employees a 401(k) account, a few bucks to invest, and a hearty piece of advice: “Good luck. Go strike it rich.”

Problem is, it’s not so easy to strike it rich. Most people know very little about investing, and the recent wave of financial scandals has shown, it’s quite easy to get taken for a wild ride. Corporate financial reporting remains stubbornly obfuscatory, and the investment banks and mutual funds that are supposed to help individual investors get rich are riddled with conflicts of interest and, on the whole, seem far more concerned about making money off small investors than helping them to make money on their own.

This is where the Securities and Exchange Commission is supposed to come in. Unfortunately, in the years leading up to Enron and the cascade of accounting, investment banking and mutual fund scandals that followed, the SEC was consistently underfunded and undermined by a Republican Congress caught in the deregulatory fervor of self-regulating markets. As a result, the agency was unequipped to prevent or even really monitor the greedy corporate self-dealing that grew rampant go-go 1990s.

In the almost three years since the Sarbanes-Oxley accounting reform legislation was passed in a rare fit of Congress actually doing something productive, the SEC has been gradually revitalized. Under Donaldson, who took over early in 2003, the agency has doubled its budget, hired lots of new blood (though it is now on a hiring freeze that does not bode well), and begun to start to matter (even if New York Attorney General Eliot Spitzer still matters more).

In doing so, however, it has ruffled the feathers of business groups like the influential Business Roundtable and the powerful U.S. of Chamber of Commerce (which spent $193 million on lobbying between 1998 and 2004, almost $70 million more than the next biggest spender on Washington lobbying, Altria—formerly Phillip Morris). These groups have gone after Donaldson somewhat relentlessly (with the Chamber even suing over a rule to make mutual fund boards more independent), and may have had something to do with his resignation. Certainly, they have frustrated some important pieces of his agenda, including an unnecessarily controversial proposal to give shareholders some minimal say in nominating candidates to the board of directors. (Under the current system, management controls the process, and director elections are almost all done Soviet-style: one and only one slate of candidates. As a result, it’s very difficult for shareholders to hold directors accountable.) Donaldson also unsuccessfully pushed to require companies to clearly and straightforwardly disclose executive compensation packages, instead of engaging in an elaborate hide-and-go-seek game with investors, as most companies do.

Cox, however, comes pre-approved by the Chamber of Commerce, which gives him an 87 percent lifetime rating. David Hirschmann, senior vice-president of the chamber, pronounced that Cox would “bring the kind of philosophy that's needed to move the SEC forward at this time.”

But looking at Cox’s legislative record, the main philosophy that emerges is one of doing favors for business, happily taking their campaign contributions, and then proclaiming that the free market works. (According to the Center for Responsive Politics, 97 percent of Cox’s 2004 re-election campaign was funded by corporate political action committees or executives of companies and their family members. Since first being elected to Congress in 1988, he has received more than $254,000 from the securities industry). Though there were surely many causes of the recent wave of corporate scandals, two of the most often cited are the 1995 Private Securities Litigation Reform Act (PSLRA)—which made it harder for defrauded investors to hold companies accountable for securities fraud and essentially absolved accountants, lawyers and bankers of responsibility for fraud—and the explosion of unexpensed stock options, which allowed companies to distort their financial statements and made it easier to give executives massive compensation packages with perverse incentives to get the stock as high as possible and then sell out before it collapsed. Cox was a primary author of the PSLRA in 1995 and has been a key player in the shameless battle to preserve the stock options loophole. In short, Cox is no friend of the small investor.

We know from the recent scandals that, left to their own devices, much of corporate America and much of the investment industry is quite comfortable playing tricks on small investors. We also know now that more Americans are now more dependent on the investment industry for their retirement security than ever before. Certainly, the SEC cannot guarantee that the stock market will go up or down. For better or worse, there is a good deal of volatility in this arrangement that is far beyond anybody’s control. What the SEC can do, however, is make sure that investors are protected from the kind of corporate scams, frauds and inside-dealing that seems to proliferate when left unregulated. An SEC Chairman who ignores this regulatory responsibility, either out of ideological certitude or mere corporate toadyism, will do so at the peril of the retirements of millions of Americans, as well as the stability of the economy as a whole.

http://www.tompaine.com/articles/20050610/cox_in_the_henhouse.php

Hypothetical future-value accounting -- The tragicomedy that was Enron

Lee Drutman: Hypothetical future-value accounting -- The tragicomedy that was Enron

01:00 AM EDT on Wednesday, June 8, 2005

BERKELEY, Calif.

FILMMAKER ALEX GIBNEY, the man behind the recently released film about Enron, entitled The Smartest Guys in the Room, has done us a great service. He has reminded us that, 3 1/2 years after the company's befuddling bankruptcy made bombshell news, the Enron story is still as infuriating as ever, and perhaps, thanks to Gibney's film, even more so.

And yet, the very brilliance of the film -- devilish, devastating portraits of Enron's gang of gonifs, Ken Lay, Jeffrey Skilling, Andrew Fastow, and friends -- may distract from the political message that the film seems to be trying to get at: that Enron was as much a product of the collective evil genius of Lay, Skilling, and Fastow as it was the product of the Arthur Andersen and Merrill Lynch firms, energy deregulation, and an entire financial press, which was far more the reckless cheerleader than the mindful watchdog.

Enron was a rotten apple, sure, but it needed rotten soil and a rotten climate to make it so. Unfortunately, film culture being what it is -- to entertain for two hours -- one can't get lost in too many big-picture details. There must be characters, personal conflict, human tragedy, and, of course, suicide and strippers. Fortunately, the tortuous path of Enron provided plenty of all of the above.

Indeed, the film is a treasure trove of the real-life tragicomedy that was Enron's insatiable hubris, including some priceless internal footage of Jeffrey Skilling laughingly telling Enron employees to put all their 401(k) money into Enron stock -- and, even better, an internal video of Skilling parodying himself, suggesting that he had come up with a new form of accounting known as "HPV," or hypothetical future-value accounting, which would boost Enron's profits even higher.

The joke, of course, is that Enron's mark-to-market method of accounting (which was approved by the once-trusted gatekeepers known as Arthur Andersen and the Securities and Exchange Commission) was actually just that: outlandish predictions about future profits on such business schemes as trading weather derivatives, booked as if they were current earnings.

Of course, now we know that they were making it up, whole-cloth. And so it's both fascinating and instructive to see exactly how they did it: from the fudged accounting to the political connections that helped deregulate energy markets for the manipulating (the film has choice footage of both Presidents Bush and their Enron connections) to the creatively named shell companies used to hide debt in a game of 3,000-subsidiary monte so ridiculously complex that in the end only Andy Fastow could figure it out (and so rewarded himself with $45 million off the top).

Watching Enron build and build is a heck of a ride, a roller coaster of corporate insatiability, in which every new height promises an even more terrifying plummet -- because we in the audience know that it ends in a train wreck. And as Enron climbs to ever higher heights, we can't help enjoying a little Schadenfreude in seeing Enron's leaders sweat. On an investor call in 2001, Skilling refers to a Wall Street analyst as an obscenity for having asked how exactly Enron makes its money.

Late in 2001, Lay reads a question during an employee session: "Are you on crack? If you are, that might explain a lot of things. If you aren't, maybe you should be." (In another priceless moment, Lay compares Enron's being under attack to 9/11.)

Yet the $30 billion question remains: How did it happen? Was it just a brilliant scheme concocted by "The Smartest Guys in the Room"? If so, why was Enron far from alone in the cascade of corporate scandals that rocked the economy in 2002?

What about WorldCom, which managed to overstate its earnings by $11 billion -- more even than Enron -- with a far less complicated fraud? (Both Enron and WorldCom did share the accounting expertise of Arthur Andersen.) And why are we still seeing accounting scandals, with AIG's complex offshore dealings merely the latest iteration?

On screen, Enron's testosterone-soaked culture exasperates, it is hardly unique. Nor was Enron the only company to remind employees of the company stock price by posting it in such places as the elevator -- making very clear what mattered -- and it was far from the only company to pit employees against each other by firing the worst performers.

And though the film shows us Enron's energy traders exchange snide comments as they make millions by manufacturing California's energy crisis (the traders' commentary is wonderfully juxtaposed with car accidents and other forms of suffering caused by their behavior), Enron was just one of 70 energy and utility companies accused of artificially driving up prices during the California energy crisis.

Nor is it clear that the minds behind Enron -- or the leaders at any of the companies that have recently collapsed under the weight of their own arrogance -- could have accomplished so much on their own. Big accounting firms gave the company's financial statements their then-meaningful seal of approval. Lawyers signed off on dubious deals -- of which many of the worst were made possible by major financial institutions.

For example, four Merrill Lynch executives were recently sentenced to prison for having helped Enron hide debt through a fraud involving the sale of Nigerian barges. And between 1997 and 2001 Citigroup sold $167 million of financial services to Enron.

Then there are the numerous state and federal regulatory agencies that should have detected something -- as should have the financial press.

Thanks to Gibney's The Smartest Guys in the Room, we have a lasting and engaging testimony of Enron's financial and moral bankruptcy. Nevertheless, those who care about the integrity of the economy must remember that Enron was not merely a stunning tale about a bunch of evil geniuses. It was also an indictment of an economic and political system that allowed a company based almost entirely on hot air become the seventh-largest firm in America.

Unfortunately, the latter is a much more difficult story to tell.

Lee Drutman, a frequent contributor, is the author of The People's Business: Controlling Corporations and Restoring Democracy (Berrett-Koehler).

http://www.projo.com/opinion/contributors/content/projo_20050608_08lee.1db5d77.html

All the world's an ad

All the world's an ad

01:00 AM EDT on Monday, May 16, 2005

In Omaha, an enterprising 20-year-old Web designer named Andrew Fischer recently auctioned off the use of his forehead as advertising space on eBay. The winning bidder, a company promoting a snoring remedy, paid Mr. Fischer $37,375 for the privilege of placing a bright-red temporary tattoo on Mr. Fischer's forehead for a month to advertise its product.

On the one hand, calling attention to Andrew Fischer and his $37,375-a-month forehead space (which, by the way, is more than the average working American earns in a year) is irresistible. It is a rare Zeitgeist moment, marking a new low in our already depressingly commercialized lives.

In a world where we are bombarded day and night by commercial messages -- where advertising springs from billboards and buses and a thousand other places we encounter in daily life -- it is finally staring us in the face. And because Mr. Fischer is among the first to explore the novel area of headvertising, he has attracted much media attention. Fischer and his forehead have appeared on ABC's Good Morning America, Fox TV's Fox and Friends, and now in these pages.

Yet to call attention to Mr. Fischer's pioneering space rental is also to prove that it works, and, by extension, to encourage others to do the same. The company that advertised on Mr. Fischer's forehead got far more exposure than $37,375 usually buys. Does this mean that we will soon see more human-body advertising? (Fischer, who has started a business at HumanAdSpace.com, sure hopes so.)

Yet if it does catch on, body advertising will soon lose its power to shock, to generate news -- just like every other new and different advertising gimmick that has come before. Then what? As Mary Hilton, a spokeswoman for the American Advertising Federation, has told BrandWeek magazine: "With the increased media clutter, capturing the imagination of consumers is getting more and more challenging. Smart marketing teams are trying all sorts of new things to reach their audience."

Who knows what new and exciting ways marketers will next find to attract our ever attenuated and addled attention by invading our personal space?

-- Lee Drutman

http://www.projo.com/opinion/contributors/content/projo_20050516_cthead.202a979.html

Corporate Character Building

Corporate Character Building
Lee Drutman
May 02, 2005
TomPaine.com


In the more than three years since the Enron scandal broke, we’ve heard an awful lot about “corporate accountability.” It has become one of those delightful symbolic catchphrases that almost everyone supports (after all, who doesn’t want more “corporate accountability”?). And yet, in achieving such mainstream acceptance, it has lost its punch as a means to hold corporations truly accountable.

For most people, “corporate accountability” brings to mind the likes of Ken Lay and Jeffrey Skilling and Bernard Ebbers and their financial accounting fictions that cost all those poor pensioners their retirements. And so, in the almost three years since the Sarbanes-Oxley Act was enacted into law in response to Enron and WorldCom, an awful lot of attention has been paid to rooting out accounting fraud. Indeed, this was the thrust of the Sarbanes-Oxley Act—to make sure corporations report their financial numbers honestly and accurately. The message in respectable circles was that corporations should be run transparently and devoid of cronyism.

It’s hard to argue with that. More than half of all households now have money in the stock market. They deserve to not be cheated by the likes of Lay and Ebbers.

Yet, at the same time—by focusing only on financial accounting—we’ve lost sight of broader definition of corporate accountability that should also include the environment, human rights, and other public social goods.

For example, although the media and federal prosecutors focused on Enron’s house-of-cards numbers games, how many people fretted about Enron’s bribery of foreign officials and its construction of massive natural gas pipelines through a pristine region of a South American rainforest? Nor did many pay attention to documented human rights abuses at the company’s Dahbol, India, power plant. Same with WorldCom. While Bernard Ebbers and fellow executives were indicted for massive accounting fraud, few paid attention to customer abuses at the phone company, such as the switching of customers’ telephone carriers without permission.

Or consider the AIG scandal currently dominating headlines. Like almost all corporate scandals that have sustained media coverage in recent years, this one focuses on fraudulent accounting. The allegations are that that AIG engaged in a number of complex transactions, some of which involved subsidiaries in Bermuda and Barbados, in order to boost its revenue by as much as $1.7 billion. The purported victims are not AIG’s individual customers (were they overcharged as AIG’s corporate clients were?), nor their employees (are they treated fairly and paid well?), nor the public at large. The purported victims are AIG’s investors, who were allegedly deceived by the phony accounting.

While the media and political powers that be focus on improving accounting standards (the current Washington debate is over Sarbanes-Oxley’s mind-numbing Section 404, which involves internal accounting controls), a growing number of activist shareholders are pushing a much broader definition of corporate accountability. At least 211 shareholder resolutions on social and environmental issues are on tap for the 2005 proxy season, a new record. Socially responsible investors will be asking companies to address such issues as nondiscrimination in employment, better disclosure of environmental liabilities and health risks, disclosure of political ties, stopping environmentally damaging projects, getting companies to leave countries with human rights abuses, and improving the wages, benefits and conditions of workers. In fact, with political channels increasingly closed off, more and more public interest groups are turning to shareholder resolutions as a way to effect social change.

Yet, if recent trends are any indication, few, if any of these shareholder proposals will receive anything close to majority support among the shareholders of major corporations.

And here’s the troubling part. The reason that these resolutions don’t stand a shot is the same reason that corporate accountability has become defined narrowly in terms of financial accounting—most shareholders invest first and foremost to grow money for their retirement or to send their kids to college, not to reform corporate behavior. They watch their stocks go up and down, hoping to catch a break and retire well. This is why people generally get angry when AIG or Enron or WorldCom pulls off accounting fraud—because it puts their retirements at risk. And this is why it becomes easy to define corporate accountability as accountability to shareholders, because that’s so many of us.

What about defining corporate accountability more broadly? Well, even the most expansive definition of socially responsible investing (the Social Investment Forum defines socially responsible investing as investing that uses one or more of the three core socially responsible investing strategies—screening, shareholder advocacy, and community investing) accounts for only 11 percent of all assets. More narrowly, the assets of socially responsible funds (a decent proxy for the percentage of investors who deeply care about the consequences of corporate behavior) still represent only about one percent of all assets in the stock market.

Most investors, it seems, want their stock market returns. (And why shouldn’t they—after all, isn’t that what investment is all about?) They’d rather not hear about whether their fortune is being built on the backs of exploited workers, overcharged customers or polluted waterways. After all, there are kids to put through college, retirements to save for.

Yet, as long as the majority of investors are able to ignore this cognitive dissonance, it will be tough to expand the political battles of corporate accountability beyond issues of corporate governance and audits and other reforms designed to make sure companies are run honestly and profitably. Tougher questions of social and environmental accountability will be left to a minority of intrepid investors and corporate campaigners operating in a political environment that offers them little to no support.

Of course, there are cases where activist shareholders can convince managers that socially responsible policies are actually good for the bottom line. (PETA, for example, was able to convince McDonald’s to adopt more humane slaughtering at a cost of $1 million per slaughtering line by showing it would yield fewer worker injuries and more meat per chicken). But mostly, it’s a tough sell. Though one can find plenty of cosmetic socially responsible corporate programs and even more “corporate citizenship” rhetoric at most of the major companies, management is rarely willing to sacrifice profits to push real change—nor should they be, under current corporate governance guidelines—and almost always recommends against social and environmental proposals. As a result, very few resolutions proposing anything more radical than mild corporate governance reforms win a majority of shareholder votes.

The solution is a difficult one. It involves recognizing that there are trade-offs to stock market investing. Retirement savings cannot keep going up and up forever without some real consequences for the environment, workers, and even long-term economic stability. The solution involves long-term thinking, the kind that neither investors trying desperately to save for their retirements nor mutual fund investors trying to beat the market for the year are not likely to take. The market is unlikely to regulate itself. Instead, politics must get involved. Incentives must be changed. We must publicly recognize that corporate accountability means more than just providing cleanly accounted-for profits for shareholders. It means holding corporations accountable for everything they do—not just their accounting, but also how they treat the environment, their workers, and whether they value human rights. Without paying attention for these things, the more we invest, the bleaker our future will look.


http://www.tompaine.com/20050502/articles/corporate_character_building.php

The Paris Hilton relief plan

Lee Drutman: The Paris Hilton relief plan

01:00 AM EDT on Saturday, April 23, 2005
The Providence Journal

Here are the circumstances, as they stand assembled before us. The Congressional Budget Office has forecast this year's budget deficit at $394 billion, with cumulative deficits expected to add up to $2.6 trillion during the next 10 years. Numerous economists have expressed concern that these burgeoning deficits could lead to high interest rates, further weakening of the dollar, and other serious economic problems.

Meanwhile, President Bush barnstorms the countryside, howling that the Social Security system is about to run out of money,and that, rather than raising taxes to keep it solvent, the entitlement program should be privatized.

Other social-welfare programs are also on the chopping block. For example, a House-passed budget resolution calls for an estimated $30 billion to $35 billion in cuts over the next five years in Medicaid, Food Stamps, foster care and adoption, assistance for abused and neglected children, and other programs that help low-income families.

Given the dire financial situation, not to mention a basic sense of fairness, you might be forgiven for thinking that the U.S. House would oppose a tax cut for the wealthiest 2 percent of Americans -- at a cost over 10 years of $290 billion: enough to cover most of the current budget deficit. After all, President Bush's 2001 tax cut has already taken away $1.35 trillion in government revenue, over 10 years, and given most of it to the rich.

You would, of course, be wrong. The House has voted 272 to 162 to repeal the tax on all estates valued at more than $1.5 million, for individuals, and $3 million, for couples -- about 2 percent of all estates.

You might even be tempted to think that, at the very least, the House would keep in place a tax on estates of over $3.5 million ($7 million for couples) -- which would amount to just three-tenths of one percent of all estates (or just 8,500 estates in 2011, when the repeal would kick in).

Again, you'd be wrong -- by a 238-to-194 House vote.

At a time of dangerously large federal deficits, at a time when Congress is proposing large-scale cuts in social-welfare programs, it is hard to understand how anybody in Congress could defend this massive tax cut for the rich with a straight face -- let alone say that, as a matter of "basic fairness," we must permanently repeal the estate tax, as did bill sponsor Rep. Kenny Hulshof (R.-Mo.).

House Speaker Dennis Hastert (R.-Ill.), meanwhile, said that the estate tax was "just evil, because it takes away the American dream from too many American families."

The estate tax does not take away the American dream, from anyone.

The rich have already achieved the American dream, and they have found multiple ways to avoid paying the lion's share of estate taxes. They do this especially through charitable giving -- which actually helps make the American dream possible for more people (and which, according to Congressional Budget Office estimates, would be reduced by an annual $13 billion to $25 billion if the estate tax were repealed).

More serious, repealing the estate tax would greatly accelerate the growing concentration of wealth, by preserving the largest fortunes -- making it even harder for the vast majority of people to have a shot at the American dream.

When the Senate takes up the estate tax, as it has promised to do, the members should think long and hard about fairness. It's difficult to see how cutting help for abused and neglected children and saddling all children with massive future federal debt -- so that children of the wealthiest Americans can inherit millions and not work a day in their life -- resembles anything close to "basic fairness."

-- Lee Drutman

http://www.projo.com/opinion/contributors/content/projo_20050423_23estat.1bfe769.html

Special counsel on prisoner abuse

Lee Drutman: Special counsel on prisoner abuse

01:00 AM EDT on Friday, April 8, 2005
Providence Journal

In recent months, Bush-administration critics have lodged disturbing accusations against U.S. Atty. Gen. Alberto Gonzales for his alleged role in authorizing torture in the war on terror.

For example: On Jan. 25, 2002, Mr. Gonzales (then White House counsel) dismissed parts of the Geneva Conventions as "quaint" in advising President Bush that the document did not apply to detainees held at Guantanamo Bay. And on Aug. 1, 2002, Mr. Gonzales requested a Justice Department memo to approve such practices as "water boarding" (simulated drowning) and "open-handed slapping of suspects" as acceptable prisoner treatment.

A long list of similar memos skirting the spirit of both domestic and international law -- documented by the American Civil Liberties Union and other groups -- has led such critics as the president of the Alliance for Justice, Nan Aron, to conclude that "Alberto Gonzales was the chief engineer behind the Bush administration's policy justifying the abusive treatment of prisoners of war."

The attorney general may prefer to dismiss such statements as outlandish, while asserting his qualifications with a series of platitudes about the importance of upholding the law and a promise that torture "will not be tolerated by this administration" (as he told the Senate during his recent confirmation hearing). Yet concerns about Mr. Gonzales's role are hard to avoid when he answers tough specific questions with such lawyerspeak as "I don't recall specifically" (again, as he said at his confirmation hearing).

Given the situation, and politics being what it is, Mr. Gonzales's coyness is to be expected. Yet it does not help us get to the bottom of a black mark on the American war on terror: the extensive evidence that the United States, while casting itself as the defender of human rights, has engaged in disturbing treatment of detainees. (One wonders how, exactly, soaking a prisoner's hand in alcohol and setting it afire, putting lit cigarettes in a prisoner's ear, or force-feeding a prisoner with a baseball makes the world safer for democracy.)

Figuring out who did what and who bears responsibility in the torture scandal is crucial, for a simple reason: We cannot be a credible international force for human rights and democracy if we cannot hold ourselves accountable for potential human-rights violations.

We can't say for sure whether Alberto Gonzales bears responsibility for the torture scandal. What we can say is that to find out requires appointing an outside special counsel to investigate. Asking the Gonzales-headed Justice Department to investigate would not provide a satisfactory answer; if the attorney general and other administration figures were absolved of responsibility, few critics would believe it. Mr. Gonzales and his associates are too close to approach the scandal objectively -- or even to appear objective.

-- Lee Drutman

http://www.projo.com/opinion/contributors/content/projo_20050408_08lee.1ba6381.html

Shelters from the storm

Lee Drutman: Shelters from the storm

01:00 AM EST on Saturday, April 2, 2005

Only the little people pay taxes.

-- Leona Helmsley

News item: Americans' unpaid taxes are now topping $300 billion a year, with people who underreport their income the biggest culprits. -- Associated Press

At a time of rising (and well-justified) concern in Washington about the metastasizing federal-budget deficit, most of the solutions proposed these days seem to involve some form or other of cutting spending. Raising taxes remains political heresy, but a lot of us wonder why nobody has seized on doing a better job of collecting taxes, as at least a partial solution.

A recent General Accountability Office report highlighted the opportunity in going after tax shelters. On the definition of tax shelters, the GAO says:

"The Internal Revenue Code has defined tax shelters in various detailed and complicated ways for purposes of having them registered, for applying certain penalties, or for certain tax accounting rules. Although the IRS has no single, authoritative definition of abusive shelters, it has generally characterized them as complex techniques promoted by sophisticated tax professionals that companies and rich individuals use to exploit tax loopholes and reap unintended tax benefits. Tax services include services involving tax compliance, tax planning, and tax advice as described by the Securities and Exchange Commission (SEC)."

According to the report, more than 10,300 individuals and 207 Fortune 500 companies have used tax shelters, accounting for a total tax revenue loss of nearly $129 billion for 1998-2003. That's an awfully large pot of money to go after at a time when revenue is in short supply. Yet, according to the GAO report, the IRS staffing levels in "key occupations" related to compliance were lower in 2002 than in 2000, and "based on past experience and uncertainty regarding some expected internal savings, fiscal year 2004 anticipated staff increases might not fully materialize."

The report further warns that "if IRS carries through with its intentions to increase resources devoted to abusive shelters, it may not have the desired level of resources in other areas of compliance."

Much of the blame can be heaped on the accounting industry, which has grown increasingly aggressive in the art and sale of tax shelters. According to the GAO report, 114 of the Fortune 500 companies and 4,400 individuals using tax shelters obtained the services from an accounting firm.

Meanwhile, a recent report by the Senate Permanent Subcommittee on Investigations found that accounting firm KPMG's revenue from its Tax Services Practice rose from $829 million in 1998 to $1.2 billion in 2001. The report also documented how accounting firms such as Ernst & Young and PricewaterhouseCoopers, banks such as Deustche Bank and Wachovia Bank, and law firms such as Sidley Austin Brown & Wood "developed, implemented, and mass-marketed cookie-cutter tax shelters used to rip off the Treasury of billions of dollars in taxes," as Sen. Norm Coleman (R.-Minn.), the committee's chairman, put it.

Both the Senate Permanent Subcommittee on Investigations and the Senate Finance Committee have been holding periodic hearings on tax shelters for years now, documenting a wide range of abusive practices ripe for regulation. With the budget deficit becoming ever more precarious, a serious congressional crackdown on abusive tax shelters is long overdue.

-- Lee Drutman

http://www.projo.com/opinion/editorials/content/projo_20050402_02tax.1ae8f3a.html

Small win against spam

Lee Drutman: Small win against spam

01:00 AM EST on Friday, March 25, 2005

Recently, a former AOL software engineer named Jason Smathers pleaded guilty to stealing 92 e-mail screen names and selling them to spammers for $100,000. These spammers, in turn, used those e-mail screen names to flood the in-boxes of AOL customers with as many as seven billion e-mails for herbal penile-enlargement pills and Internet casinos.

(To get a sense of how many e-mails that is, assuming you could delete one e-mail per second, it would take you 222 years to delete seven billion e-mails from your inbox.)

The Smathers case is significant in that it is one of the very first cases brought under the less than two-year-old Can-Spam Act, a largely toothless federal statute that makes it illegal to send e-mails with false header information but has done virtually nothing to stem the tidal wave of spam flooding e-mail in-boxes.

The statute is so weak that U.S. District Judge Alvin K. Hellerstein had originally rejected Smathers's guilty plea last December because at first, he wasn't convinced that Smathers' despicable activities were actually illegal under the act.

Also disturbing is that Smathers, who was low on the totem pole at AOL, was able to hand the company's entire subscriber list to spammers with what appears to have been relative ease.

If something like this could happen at a major Internet service provider like AOL, one has to wonder: What about other companies?

Although the Smathers prosecution is noteworthy, it is a mere drop in the vast and seemingly bottomless bucket of spam. Experts estimate that in-boxes are now bombarded with 15 billion spam messages a day (more than twice the 7 billion spam e-mails involved in the Smathers case), which accounts about 75 percent of all e-mails -- a time waste that costs U.S. businesses as much as $87 billion a year in lost productivity (not to mention to general levels of frustration it adds to an already exasperated society).

While it is encouraging to see a small legal victory against spam now and then, the numbers just presented tell us quite clearly that we are losing the war. Federal prosecutors need stronger laws, more resources, and tougher penalties to go after spammers. One step would be to broaden the definition of spam to include e-mail that is not just fraudulent, but also unwanted, annoying and harassing.

-- Lee Drutman

http://www.projo.com/opinion/editorials/content/projo_20050325_25smath.1a643ad.html

The apocalyse approaches online

The apocalyse approaches online

http://www.projo.com/opinion/contributors/content/projo_20050322_ctraptu.2073e05.html

01:00 AM EST on Tuesday, March 22, 2005

BERKELEY, Calif.

GO TO RaptureReady.com and there you will find something called the Rapture Index, which tracks the news in 45 categories related to the biblical prophecy of the Second Coming of Christ.

The higher the index goes, the closer we get to the "fasten your seatbelts" zone, which means that the Rapture could be coming any day now.

For the true believers, of course, the Second Coming is the day to end all days -- the day when Christ finally returns as promised, and the devout are eternally rewarded, while the heretics are eternally damned to the fires of Hell. Therefore, it is with certain eager anticipation, it seems, that the folks at RaptureReady posted stories about the recent tsunami disaster in Asia (after all, they "look for more earthquake activity as the return of Christ draws near").

RaptureReady is keeping its eyes on such trends as "Oil Supply and Price" ("The final battle of Armageddon may . . . involve a dispute over oil"), the "movement to join all religions into one" ("This has been a goal of the Devil for some time. By having all religion unified, he could more easily control their leadership"), and global famine ("During the time of the tribulation, a day's wage will be equal to a loaf of bread"), among many other categories.

While the tendency of well-educated secular progressives is to scoff at this as just a bunch of fringe lunatics holding up "The End Is Nigh" signs, it is starting to seem as if the well-educated secular progressives are the ones who are on the fringe. According to a 2002 Time/CNN poll, 59 percent of Americans believe that the Book of Revelation prophecies are actually going to come true, and one in four Americans believes that 9/11 was actually predicted in the Bible. And Timothy LaHaye's Left Behind series -- 12 volumes of tales of the imminent biblical apocalypse -- are among the best-selling books in America.

For a number of progressive-minded folks, this is frightening and dangerous stuff. For example, in a recent speech accepting the Harvard Medical School Center for Health and the Global Environment's Global Environment Citizen Award, journalist Bill Moyers raised the worrisome prospect that this biblical millennialism might be behind the right wing's refusal to do anything about global warming. Quoting Grist Magazine, Moyers suggested, "Why care about the earth when the droughts, floods, famine, and pestilence brought by ecological collapse are signs of the apocalypse foretold in the Bible?"

But where Moyers and others see alarm bells, I see opportunity. Instead of wondering how these people could be so deluded, progressives should be figuring out how to use these delusions as an organizing strategy. With a little work, such progressive-agenda items as gay marriage, abortion rights, and legalizing drugs could all be transformed from betes noires of Christian conservatives into signs of the Second Coming of Jesus.

The folks at ReadyRapture.com already seem to be on the boat here. For example, one of the 45 categories they are following in their Rapture Index is "Moral Standards." They note, "The scourge of gay marriage upgrades this category." Therefore, if these true believers are really serious about the Second Coming, they ought to welcome "the scourge of gay marriage," instead of passing state constitutional amendments to ban it.

Similarly, instead of protesting outside abortion clinics, these hard-core Christians should welcome a woman's right to choose, since, according to RaptureReady, "the Scripture says, 'In the secret place doth he murder the innocent' (Psalms 10:8). The 'secret place' is the womb of a mother." Come on, folks: Do you want the Rapture or not?

RaptureReady is also following "Drug Abuse":

"The Bible . . . may make mention of drugs. In the Book of Revelation the word 'sorcery' has the Greek word pharmakeia as its root. This is where we get the word 'pharmacy.' When it says 'they repented not of their sorceries,' it could mean they repented not of their drug use."

Here, it would appear, is an untapped constituency for helping to expose the "War on Drugs" as a waste of time and resources, as well as for fighting for the long-overdue decriminalization of marijuana. After all, more drug use means an earlier Rapture.

More broadly, RaptureReady even has a category entitled, simply, "Liberalism." (You can't make this stuff up.) However, at last check, the "Liberalism" index was down to just "1" (the lowest level), with RaptureReady noting, "Liberals in the U.S. take huge beating." If only John Kerry had reminded evangelical voters that without liberalism on the rise the Rapture Index would be that much further from the Second Coming, he might have won the election.

The Web site also notes that "liberalism is . . . the 'true conspiracy.' The liberal media is 100 percent control [sic] by the forces that bow to this humanistic ideology." Perhaps these folks could even be enlisted in a crusade to shut down Fox News.

Sure, the Rapture Index also roots for "Inflation," "Unemployment," "Volcanoes," and "the Antichrist." Not to mention "Global Turmoil," "Drought," and "The Mark of the Beast." But in these troubled times, you have to pick your battles.

Lee Drutman is a frequent contributor.

Grinchier is healthier this year (Providence Journal)

Providence Journal Commentary - Grinchier is healthier this year
December 30, 2004
Lee Drutman



BERKELEY, Calif.

TWAS THE WEEK before Christmas, and all through the stores, consumers were spending, but should have spent more.

At least that was the view of Wall Street analysts and retail-store owners, who worried that holiday shoppers were not getting into the holiday spirit and spending with their usual reckless abandon this year.

For example, in a report issued just a few days before Christmas, Bank of America senior retail analyst Dana Cohen offered a grim prediction: "With only a few days left, we suspect that Christmas '04 is turning into a much more lackluster season than even we anticipated (and we were not too optimistic). We recognize that there are some very big days left both pre- and post-Christmas; however, we are running out of days to make it up."

Michael Niemira, chief economist at the International Council of Shopping Centers, meanwhile, complained that the holiday season had been "soft, sluggish and uneven" for retailers.

The numbers were indeed bleak for these analysts. The ICSC was reporting that Christmas retail sales were up a measly 3 percent over last year's mere $219.9 billion (which, by comparison, is a little less than Sweden's annual gross domestic product: $230 billion). And to think that the National Retail Federation had projected a 4.5-percent increase over last year, which would have brought spending up to more than $700 per shopper (up from $672 in 2003).

Meanwhile, on the crucial Saturday before Christmas (typically the biggest single shopping day), consumers spent a miserly $6.7 billion, or the equivalent of almost the annual GDP of Malawi ($6.8 billion): a full 7 percent less than they had on the Saturday before Christmas in 2003.

What was going on? Could it have been that perhaps, after years of participating in the Christmastime tradition of spiraling credit-card debt, some folks had decided to pull back a little? And could this -- contrary to the narrow views of Wall Street -- maybe be a good thing for the long-term health of the economy?

After all, the average U.S. household now owes $9,205 in debt on an average of 13.4 credit cards, and 13 percent of after-tax household income is going to pay debts -- the highest percentage in about two decades. By comparison, household saving rates in 2004 averaged just 0.9 percent of after-tax income -- the lowest ever. In October, the rate fell to just 0.2 percent. American families are declaring bankruptcy at the rate of about 1 every 15 seconds. And those retail analysts wanted families to spend more money on Christmastime shopping? What were they trying to do?

Yet because more than two-thirds of the U.S. economy depends on consumer spending -- and because some stores depend on Christmas shopping for as much as 40 percent of their annual sales -- Yuletide is always crucial for the economy. If consumer spending doesn't keep growing, goes the logic, the economy can't keep growing. And then we all suffer.

Problem is, consumers can't keep spending and going into debt forever to keep the economy rolling. At some point, something's gotta give. And it appears that we may be getting quite close to that season of "giving."

According to the International Council of Shopping Centers, 39 percent of Christmas shoppers surveyed said that they had spent less because their finances were deteriorating. And Howard Davidowitz, chairman of the retail-consulting firm Davidowitz & Associates, has said that Americans "are really starting to worry about credit-card interest. Consumers have the highest debt and lowest savings in history."

Then, of course, there is the great existential question regarding all this Christmas shopping: Does it really make us happy? Does it really bring us closer to our loved ones? Or has it merely turned all our relationships into a series of Well-what-did-you-get-for-me-this-year contests? Could the downturn in Christmas shopping be a sign that maybe -- just maybe -- some people have had it with the maddening crowds, the long lines, and the relentless materialism, which can't really be what the spirit of Christmas is all about?

According to a recent poll done for the Center for a New American Dream (a nonprofit that pithily promotes "More fun, less stuff"), 88 percent of Americans say that society is too materialistic, 87 percent say that "our current consumer culture makes it harder to instill positive values in our children," and 80 percent say that society is "too focused on shopping and spending."

Additionally, the poll found that since Sept. 11, 2001, 40 percent of Americans had "made conscious decisions to buy less," and 58 percent said that excessive materialism causes people to work too much. (Americans on average work more hours per year than people in any other industrialized country -- about 350 more hours per year than our counterparts in Western Europe.)

Finally, 52 percent of Americans say that they have too much debt. Does this mean that we have finally gone as far as we can with this whole Christmas-shopping thing?

Still, even after Christmas, the retailers continue to do what they know how to do best: push irresistible bargains on what should otherwise be perfectly resistible junk. But an economy that relies on consumers' spending themselves into ever-increasing levels of debt and doubt does not seem to be a particularly sustainable one. If big retailers and Wall Street analysts want to give the country a real Christmas present, perhaps they should start thinking about this sooner, rather than later.

Lee Drutman, a frequent contributor, is the co-author, with Charlie Cray, of The People's Business: Controlling Corporations and Restoring Democracy (Berrett-Koehler Publishers).

Spam spreads

Providence Journal Editorial

Spam spreads

01:00 AM EST on Wednesday, March 9, 2005

By all accounts, the tidal wave of spam -- the colorful name for unsolicited e-mail -- increasingly overwhelms the Internet. Experts estimate that three out of every four e-mail messages are spam -- or about 15 billion messages a day -- and that the cost to U.S. businesses ranges from $10 billion to $87 billion a year in lost productivity (plus another $140 million to pay for spam filters).

Yet despite recently enacted federal anti-spam legislation, as well as anti-spam laws in about half the states, spamming shows no sign of letting up. Recent court cases highlight the limitations of the current methods of law enforcement in the world of spam.

Consider a case decided on Dec. 20, involving a $1 billion judgment in favor of a tiny Internet service provider (ISP) in Iowa. In 2000, Robert Kramer, owner of the five-employee ISP with about 5,000 e-mail customers, filed a suit against 300 alleged spammers -- after his customers had received up to 10 million spam e-mails a day.

Four years later, U.S. District Judge Charles R. Wolle found three of the 300 defendants guilty, under both the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and the Iowa Ongoing Criminal Conduct Act. The judge ordered AMP Dollar Savings, of Mesa, Ariz., to pay $720 million; Cash Link Systems, of Miami, to pay $360 million; and Florida-based TEI Marketing Group to pay $140,000. So the judgments are soaring, although how much money will be collected is another matter. (Lawyers for the defendants didn't even show up at the trial.)

According to The Spamhaus Project, an organization that works against spam, Florida has 54 of the 180 biggest spamming operations. And for good reason: The state's favorable personal-bankruptcy laws let spammers who are sued hold on to most of their possessions.

The Iowa case also highlights that while justice moves slowly (in this case, four years), spammers move at light speed. Experts estimate that spammers now change domain names every two days -- compared with once a week just three months ago. Soon it could be every few seconds.

While the authorities struggle with limited tools, spam, by flooding Internet in-boxes, threatens the very viability of e-mail. Without some new methods of spam-law enforcement, the situation will only worsen.

http://www.projo.com/opinion/editorials/content/projo_20050309_09spam.1bf1609.html

A generous excerpt from my book in In These Times

The People’s Business

Controlling corporations and restoring democracy

By Lee Drutman and Charlie Cray

One does not have to look far in Washington these days to find evidence that government policy is being crafted with America’s biggest corporations in mind.

For example, the Bush administration’s 2006 budget cuts the enforcement budgets of almost all the major regulatory agencies. If the gutting of the ergonomics rule, power plant emissions standards and drug safety programs was not already enough evidence that OSHA, EPA and FDA are deeply compromised, the slashing of their enforcement budgets presents the possibility—indeed, probability—that these public agencies will become captives of the private corporations they are supposed to regulate.

This should come as no surprise to anybody familiar with the streams of corporate money that flowed into Bush campaign coffers (as well as the Kerry campaign and all races for the House and Senate) in the 2004 election. The old “follow the money” adage leads us to a democracy in thrall to giant corporations—a democracy that is a far cry from the government “of the people, by the people, and for the people” that Lincoln hailed at Gettysburg.

At a time when our democracy appears to be so thoroughly under the sway of large corporations, it is tempting to give up on politics. We must resist this temptation. Democracy offers the best solution to challenging corporate power. We must engage as citizens, not just as consumers or investors angling for a share of President Bush’s “ownership society.”

To read the full article:

http://www.inthesetimes.com/site/main/article/1971/

Dick Grasso and executive pay

From the Providence Journal
http://www.projo.com/opinion/contributors/content/projo_20050215_ctlee.200fa8d.html

Lee Drutman: Corporate boards take care of pals

10:15 AM EST on Tuesday, February 15, 2005

BY NOW, we are all familiar with the fractured fairy tale of former New York Stock Exchange Chairman and CEO Richard Grasso. Hard-working kid from Queens begins his career as an NYSE clerk in 1968, charms his way up the ladder, makes lots of friends, puts some of them on the board of directors at the not-for-profit NYSE, and somehow winds up with a $188 million pay package.

The public finds out, Grasso is forced to leave, and his name becomes a symbol of the current era of executive excess, in which top executives are, on average, paid 300 to 400 times what average workers earn.

So -- how did he do it? And how can we prevent this kind of avarice from happening again?

The latest insight into this question comes from a recently disclosed 130-page report by NYSE lawyer and former federal prosecutor Dan K. Webb. The Webb report details how Grasso's hand-picked board of directors was largely kept in the dark about Grasso's metastasizing remuneration -- which added up to $192.9 million in compensation and paid pension benefits over eight years of service -- while Grasso quietly (though ultimately not quietly enough) started pulling out his retirement benefits.

According to the report, Grasso's compensation was $113.6 million to $124.5 million too high, on the basis of salaries for comparable positions. Although Grasso comes across as a smooth, scheming operator in the report, the question remains: Could he have won such a pay package for himself without having a board willing to either pay him his millions or at least conveniently look the other way?

The board that granted Grasso his millions was a Who's Who of Wall Street CEOs, including James Cayne, of Bear Sterns, Henry Paulson, of Goldman Sachs, and David Komansky, of Merrill Lynch. Another big-league board member was H. Carl McCall, the former New York State comptroller and state Democratic Party bigwig who, as a member of the exchange's compensation committee, first asserted that he didn't know how Grasso had gotten paid so much, but then defended the salary.

These directors didn't get to their present positions of power by being stupid or easily duped. Which makes it hard to believe that they were tricked outright by Grasso. What is easier to believe is that they willfully turned the other way, following the advice of legendary U.S. House Speaker Sam Rayburn: "If you want to get along, go along."

Then there is the special case of Kenneth G. Langone, chairman of the compensation committee at the time of Grasso's top pay. According to the Webb report, Langone argued in 2002 for a new Grasso contract (which ultimately led to the outsized payout), in response to rumors that Grasso might leave the NYSE to become Treasury secretary. According to New York Atty. Gen. Eliot Spitzer, Langone was a full-on conspirator in the plot to take the NYSE's money and put it in Grasso's pockets.

Spitzer is suing Grasso and Langone for having violated the New York State Not-for-Profit Corporation Law, which mandates that executive compensation must be "reasonable" and "commensurate with services provided."

Unfortunately, the Grasso pay debacle is only a more extreme version of what is happening at corporate boardrooms across America -- where CEOs place their friends on the board of directors and then help them come up with confusing, misleading, and ever more outrageous pay packages.

As a result, executive pay continues to surge. For example, according to a recent Reuters study of the Standard & Poor's 500 companies, CEO median cash pay -- base salary and bonuses -- rose from $1.75 million in 2002 to $2 million in 2003 (the latest year for which such numbers are available). Bonuses were up 20 percent, from $884,000 to $1.06 million.

A dose of board independence -- today's bromide solution for all that ails corporate America -- is obviously needed. Certainly, those responsible for deciding executive compensation should not be in a position in which they are also trying to curry favor with management to keep their $160,000-a-year gig as director.

Meanwhile, the CEO of a company should not also serve as the chairman of the board that sets his or her salary -- as 75 percent of CEOs currently do (and as Grasso did at the New York Stock Exchange).

Another promising development comes from the Securities and Exchange Commission, where Chairman William Donaldson has proposed bringing more transparency to the disclosure of executive compensation, which is often presented to shareholders (and even sometimes directors) in hopelessly confusing and misleading terms.

But perhaps the easiest and most straightforward way to put a clear check on excessive executive compensation is for shareholders to have the right to vote on the compensation -- after all, it is their money.

The lesson of Dick Grasso and his $188 million should have sent corporate boards scurrying to remove potential conflicts of interest and to clarify pay packages in order to ensure fairness. It hasn't. But the resistance of executives and insiders to the growing chorus of both shareholder and citizen complaints can last so only long.

Give us a few more Dick Grassos, a few more Webb reports, and a few more William Donaldsons, and somewhere, somehow, something has got to give.

Lee Drutman, an occasional contributor, is the communications director for Citizen Works, a public-policy research and lobbying group, and the author of The People's Business: Controlling Corporations and Restoring Democracy.