Anyone who is honest must admit that Enron has created a mess. People have lost jobs, investments, and retirement funds. But what, or more appropriately, who, is to blame? Pundits are struggling to make sense of Enron's ugliness.
In his January 18 New York Times editorial, “A System Corrupted,” Paul Krugman writes: “The Enron debacle is not just the story of a company that failed; it is the story of a system that failed. And the system didn't fail through carelessness or laziness; it was corrupted.” Shame on wingtip wearers everywhere.
George Gilder's recent Wall Street Journal editorial, “A Corporate Crime Wave?” offers, “If you believe the news coverage, corporate leaders are racing to despoil, mulct, defraud, poison, pillage, and ruin their own businesses, their nation's soils and waters, their retirement funds, and the world economy.” Take that, Mr. Krugman.
A careful review of recent Enron-related editorials like Krugman's–editorials that far outnumber the Gilder-style offerings–reveals that, while perhaps overstating his case a bit, Mr. Gilder isn't far from the truth. Anti-business, anti-free market factions are using Enron as ammunition for a constant barrage, seeking to lay the blame for societal evils at the feet of large corporations while calling for greater government involvement in business dealings.
Enron provides an example of what happens when corruption leaks into and becomes part of the corporate culture. But Enron's failure is not an indictment of business, or even big business, as a whole. To the contrary, corporations have the potential to meet societal needs that no entity–especially one that is taxpayer funded–is able to address.
Case-in-point: This past week, another big company, often maligned in the media and by anti-business folks, did something interesting. Not much was made of it, however, especially with Enron occupying the public eye. The company in question is Pfizer, the gigantic pharmaceutical firm, which addressed a pressing need in our country: the availability of prescription drugs for the poor.
Approximately 65 percent of people over the age of 65 have some kind of coverage for prescription drugs. The remaining 35 percent have none. Of course, this does not mean that all of them cannot afford supplemental insurance. Some portion of this population chooses not buy supplemental coverage, which is their decision. After removing those who have insurance and those who choose not to carry it, we get to the core: the poor, mostly elderly, who have daily need of medication but cannot afford the supplemental insurance or the medicine itself. Horror stories abound about elderly widows who cut their pills in half because a partial dose seems better than none at all.
What to do about this? Prescription drug benefits were, after all, a major thrust of the presidential campaign debates in 2000. Both Democrats and Republicans have floated plans. One Republican plan would cost $40 per month, have an annual deduction of $250, and cover half the cost of prescription drugs up to $2,100. A Democratic draft would cost $25 per month and pay half the cost of prescription medication up to $2,000.
The problem with these offerings, like all government programs, is that it is difficult to target just one segment of the population. Equity is something our laws take seriously. People who can afford other forms of prescription insurance and those who choose not to carry supplemental insurance now seemingly should be included in the governmental coverage. But even then the proposals do little to address the real problem.
While each might provide a little relief, both fail to exclude those who don't really need the service and truly address the people who need help. But if these are the only options available, perhaps it is wise to choose one and hope for the best.
Enter Pfizer. The pharmaceutical giant, often criticized for its alleged greed, for profiting on people's illnesses, accused of lining the pockets of its wealthy stockholders with money taken from the poor, made an announcement a few days ago designed to meet the pharmaceutical needs of our nation's poor.
Beginning March 1, Pfizer will provide something called a “Share Card” which will allow the user to purchase a one-month supply of any Pfizer medicine for a flat fee of $15. To be a part of the program, you have to be 65 years or older or a Medicare enrollee, have an individual income below $18,000 for an individual or $24,000 for a couple, and have no other prescription coverage. There is no monthly fee; the patient pays for what he or she uses. There is no membership fee or limit on the number of prescriptions and the enrollment form is simple. Participants can use the pharmacy of their choice.
It is a private industry plan that does something no government plan can do: it excludes those who really are not in need of help and it targets those who are in need of relief. It does not create another giant government-run bureaucracy, and, like all great ideas, it is uncomplicated. Pfizer's plan has been endorsed by dozens of elderly associations, medical foundations, and politicians.
So what's the motivation? Pfizer, like most companies, is serious about its business. It is in their interest to make a profit and to benefit shareholders. There ought to be no guilt or shame in stating this clearly. It is likely that this endeavor will increase Pfizer's share of the pharmaceutical business. Moreover, as orders for medicine increase, the cost of production per piece will decrease.
But it is also good for consumers. Other companies will be forced to respond. They will either begin similar programs or they will lose a share of the market. Furthermore, consumers will benefit from the decrease in cost. In other words, it's good business.
Like most companies, Pfizer understands its responsibilities to its communities and motivated by more than self-interest. Pfizer's actions demonstrate an understanding of the benefits such services offer the elderly poor, as well the bottom line.
Enron is an example of all that is ugly in the free market system. But there are other places to look to get a balanced, realistic picture of the business world. Pfizer is a fine example. Their example proves that it is possible–and logical–to be serious about profit and social responsibility.