The equality/efficiency trade-off: empirical
evidence
Arthur Okun. Equality and Efficiency: The Big Trade-off,
1975
The pursuit of efficiency necessarily creates inequalities. And
hence society faces a trade-off between equality and efficiency.
Paul Krugman in NYT Sept. 16, 2001
In retrospect, our national neglect of airport security boggles the mind.
We've known for many years that America was a target of terrorists. And every
expert warned that the most likely terrorist plots would involve commercial
airlines.
Yet airports throughout the United States rely on security personnel who are
paid about $6 an hour, less than they could earn serving fast food. These
guardians of our lives receive only a few hours of training, and more than 90
percent of the people screening bags have been on the job for less than six
months.
JOHN SCHWARTZ with REED ABELSON in NYT Jan. 17, 2002
With 1,400 professionals, the Houston office is among Andersen's largest.
The leading accounting firm in the city, Andersen captured a commanding presence
in the energy industry, auditing companies like Pennzoil. Enron was one of
Andersen's biggest clients, generating about $52 million in accounting and
consulting fees in 2000 alone.
Partners at Andersen generally make more than $500,000 a year, but a
partner with a major account like Enron would probably make $1 million or more,
said Arthur Bowman, the editor of Bowman's Accounting Report.
Arthur Levitt in NYT Jan. 17, 2002
As four government agencies and six committees of
Congress begin to investigate the Enron failure, it's important to recognize
that this is not just about Enron and its auditor, Arthur Andersen. We need to
look at the entire system of gatekeepers -- auditors, corporate boards,
analysts, ratings agencies, investment bankers, lawyers and accounting
standard-setters -- who operate and regulate our financial markets. The
confidence of individual investors depends on honest, independent gatekeepers.
Sadly, the collapse of Enron shows this system urgently needs
reform.
Tom Walker
