First came Enron, and that was bad enough. Then came Arthur Andersen. Then came WorldComm, with an astonishing $3.8 billion accounting fraud that this August turned out to be even worse: $7.2 billion in total.
Not only have giants like Xerox and Tyco been implicated in creative accounting scandals – Martha Stewart, the one-woman home-economics phenomenon, and Adelphia, the cable-television provider that the Register had praised in the past for its refusal to allow pornographic channels on its systems. Its president was arrested and taken from his home in handcuffs over money matters.
Things seem to have gotten so bad that the 1990s are being dubbed the real decade of greed – making the 1980s savings-and-loan scandals look like petty theft.
There's something to that, of course. Greed is at the heart of the matter. But another problem seems to have fueled the latest scandals: Dishonesty is suddenly socially acceptable.
In fact, in his 1990 World Peace Day message, Pope John Paul II predicted that the world might be entering a decade of dishonesty. Noting the explosion of consumerism in a world of new threats of violence, he said, “The sense of precariousness and insecurity that such a situation engenders is a seedbed for collective selfishness, disregard for others and dishonesty.”
The most common source of corporate scandal showed just that. Accounting techniques designed to make company results look better have been rampant. Companies report quarterly results, and there are dire consequences if those results do not meet earlier estimates by analysts. The company could watch its stock's price fall by 10% or more in a day.
So companies decided to hide shortfalls by changing the way they do their reporting. Beginning with the profits investors are expecting, they would then work with sales and expenses to make the report show the desired result. These scandals would not have been possible without calculated, carefully crafted public dishonesty on a large scale.
But it's very easy to point fingers at corporations that lie. The truth is, lying is having a bit of a heyday right now. According to one recent study, two-thirds of Americans believe that there is nothing wrong with telling a lie. Only 31% of us have significant scruples about honesty. In fact, people are likely to feel like suckers for being honest.
Lies are everywhere. Children lie to parents to escape trouble, parents lie to children because, as one researcher put it, strict accuracy is simply not high on the list of priorities when speaking to children. Recent studies show an increase in cheating on tests – and, worse, of teachers becoming complicit in the cheating. Taxpayers lie to the government and think it's okay. Employees lie to employers about the use of their time, their sick days and their use of company equipment like the telephone and the Internet. Politicians lie to their constituencies. Citizens lie to bureaucrats. Patients lie to their doctors about their symptoms in order to get the medicine they want, doctors lie to their patients to cover for themselves, and both conspire together to lie to insurance companies.
But broken families have learned the hard way what Wall Street is finding out: Lies have consequences. Honesty isn't just necessary to give people “good character” in a personal, moral way. It is necessary for happy human flourishing.
A certain phraseology of the Holy Father's could serve as a good antidote to all this lying. Speaking to families, he has often said, “Family, become what you are.” When speaking to lay people, he has said, “If you are what you should be, you will set the world on fire.”
Becoming what you are, being what you should be. Only a culture of authenticity, in which people are true to themselves and truthful to others, can prevent the kinds of corporate scandals we've seen recently – and their destructive economic aftermath.
And only individual honest people – a lot of us, together – can build a culture of authenticity.