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Commentary > Wastler's Wanderings
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Docks and stocks: Give us pain
Our courageous representatives won't fix what ails accounting and shipping industries.
October 9, 2002: 10:04 AM EDT

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NEW YORK (CNN/Money) - You wouldn't think longshoremen and accountants have much in common, but they do.

In each case, there is a major industry problem. And in each case the government, in a misguided manifestation of lets-try-to-make-everyone-happy politics, is failing to attack the root of the problem.

Take accounting. The problem? Accountants are working for Mr. Management, not Joe Shareholder. If this wasn't apparent with Enron it certainly became obvious with WorldCom and the other Telecom Terrors.

The government's answer? A tough, new Accounting Review Board in the SEC, led by someone with serious Wall St. 'cred.' Strong medicine for a tough problem -- a debt load Dirty Harry!

Sure...but, good golly, don't make him too tough -- it might cause the accounting industry pain.

There are reports about dissent within the SEC over who should head up the new board. John Biggs, a pension fund executive with a rep for busting accounting chops, was believed to be an early front runner. But that's now in doubt following complaints from the accounting industry to various elected officials about how tough Biggs is likely to be on the industry.

The accounting industry has contributed $7.8 million to Congress so far in this election cycle, according to the Center for Responsive Politics.

Now, compare this to the port situation.

President Bush, with the help of a federal court, has reopened West Coast ports, which were shut down by a management lock out for 10 days.

There are some poignant reasons for the action. Many small businesses are suffering. Perishable cargoes are getting totaled. And the nation's retail and manufacturing sectors are now facing serious logistical backlogs leading into the holiday season.

Sure, lots of short term pain demanded Taft-Hartley aspirin.

But the underlying problem is not going to be cured. The longshore union, like a dinosaur thumbing its nose at evolution, doesn't want new technology (basically the same bar-code, scanning stuff used in stores) on the dock. Management, which has folded like a cheap chair on this issue in previous contract talks, is finally willing to push it.

A government imposed reopening just puts off this fight -- it doesn't end it. And the ports won't be functioning well in the meantime. Disgruntled longshoremen aren't going to be breaking any productivity records. And in the scramble to get cargo moving after the stoppage, rates may go up.

 
Fight the power. Click helment.

Great, we could get a mucked up transportation system AND higher costs. At least retailers and manufacturers -- which were facing a pretty mediocre Christmas to begin with -- have something to blame poor fourth quarter results on.

Letting longshoremen and ship lines duke it out will ultimately make ports more efficient -- which will ultimately be better for our economy. A tough accounting regulator may cause discomfort on Wall Street, but in the long run would restore investor confidence and bring money back into the market -- ultimately good for Wall Street.

No pain, no gain. No guts, no glory. Fear no evil. Death before dishonor.

Take your pick...it all comes down to suffering in the short term to benefit in the long term.

But with elections looming, our representatives exhibit a very low pain threshold.  Top of page


Allen Wastler is Managing Editor of CNN.Money and a commentator on CNNfn. He can be emailed here.




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.