I almost choked on my wafer when I read your quote from R. Scott Appleby that "To regain parishioners' confidence, the Church should start acting like a corporation" ("The economic strain on the Church," Cover Story, Apr. 15). Which monument to public integrity does Mr. Appleby suggest that the Church emulate--Enron Corp.?
Using this logic, the Church could reassure the faithful by publishing financial statements audited by Arthur Andersen. If things continued to be difficult, they could merge with the 700 Club. I'm sure parishioners wouldn't mind. A less drastic solution might be to sell corporate sponsorships. Think how moving it would be to worship at St. Patrick's-Nike Cathedral.
Without doubt, the Church needs dramatic reform on a variety of levels. But as they consider the future, Catholics should draw on their past and follow a higher standard.
It saddens me that the media continue to overlook the pain of the victims, and instead focus on the disturbing cash-flow crisis the Catholic Church has created for itself. Frankly, I see no difference here between the Catholic Church and Enron. Both institutions chose to serve their own needs before the needs of their constituents, and this self-absorption is the root cause of their pain. I hope the Catholic Church goes bankrupt, and perhaps someday folks will look to their CEO in Rome as a leader who chose not to lead.
David G. Wiser
As a Catholic father of four, I am angry. My faith is strong, but my trust is shattered. Am I reluctant to trust priests with my children? You bet. Am I suspicious that any contribution I might make might be (mis)directed to support their legal defense? Yes. Catholic leaders had better wake up. They have been out of touch with younger Catholics for years. I won't follow or support them blindly.
What kind of parent wouldn't pay legal fees or rehabilitation costs--even when burdensome--for a child in trouble with the law or addicted to drugs? The majority of Catholics will view their holy mother the Church the same way during this crisis.
John E. Fagan
As with many of my fellow parishioners, I recognize that the Church is not a democracy, but we will vote with our money and our feet. Martin Luther is beginning to look a whole lot better these days.
Thomas J. Raftery
Carlisle, Mass. Toyota Motor Corp. talks about its desire to become American but has not done so in reality ("The Americanization of Toyota," International Business, Apr. 15). To become a truly American company, Toyota must stop selling its vehicles to regimes hostile to the U.S.: Iraq, Iran, Syria, etc. CNN has footage of Taliban and al Qaeda operatives riding in the back of Toyota pickups. Toyota must follow the same rules imposed on other American corporations by the U.S. government.
Toyota also needs to start working with the United Auto Workers and let its plants become unionized. And Toyota needs to move more of its vehicle production to the U.S., where it makes the most profit and is obliged to create jobs. Let's not allow Toyota to cherry-pick what it wants in the U.S.
Paul C. Lam
Plano, Tex. You are wrong, as history will eventually show, and Congress, Warren Buffett, and Alan Greenspan are right ("Don't blame the stock options," Editorials, Apr. 15). Give a CEO enough stock options, and he prospers, regardless of what happens to his company. Look at Ford Motor Co. Look at Enron Corp. Just look at what is happening at Oracle Corp., or any other company relying on stock options. Executives are looking out for No.1. The CEO cashes in his options and walks away with millions and doesn't have to sweat whether his company succeeds or goes belly-up. That is incentive?
Robert E. Schuhmann
Thank you for helping spread the word on the material--and in many cases egregious--transfer of wealth from shareholders to employees through options ("Reckoning the cost of stock options" and "How to clean up the options mess," BusinessWeek Investor, Apr. 15). I am tired of reading in the press about how options "align the interests" of management with shareholders. To say this is to misunderstand what an option is: pure upside with no downside. Instead of options, the solution is to issue shares of restricted stock, based on performance, then have this stock vest over an extended period.
Restricted stock must be expensed, so it doesn't artificially inflate the income statement, and recipients participate dollar-for-dollar with shareholders--on the downside as well as the upside. I agree wholeheartedly with Chris Waldorf of Deloitte & Touche LLP: Shareholders need to wake up and demand an end to the looting.
Kenneth F. Broad
It strikes me that the way to encourage companies to provide more of the performance-based options described in "How to clean up the options mess" is not to change the rules for accounting for fixed options but to change the rules for variable options so that the current bias against their use is eliminated. I would argue that TIAA-CREF CEO John Biggs is misguided. If you make companies expense fixed options, they will dry up as well.
Washington While there is a higher cost to refinance commercial-paper liabilities with longer-term securities, in many cases it may be a lot less [than you indicate in] "There goes the cheap money" (News: Analysis & Commentary, Apr. 15). This can happen if a company uses the interest-rate swap market to change the fixed-rate payments to floating-rate payments. For example, in the current environment an AAA issuer's net cost to convert a 10-year fixed obligation back into a floating-rate obligation is only 0.50%. Lower-quality issuers would certainly incur a higher net cost, but that can be mitigated somewhat by using a shorter maturity than 10 years.
Of course, if the company chooses not to swap his fixed payment for a floating one, its costs would rise. In addition, the company certainly can choose to swap only a portion of the fixed debt if it is uncomfortable with current swap levels, preferring to wait for a more opportune moment.
Yardley, Pa. As one of the leaders of the effort to map the variance in the human genome, I can say BusinessWeek does a nice job of raising the ethical, privacy, and control issues associated with tissues that contain genomic and gene expression data and are linked to individual medical data ("Human tissue: Handle with care," Science & Technology, Apr. 15). The next step in your analysis should be to explore the need for a more coherent legal approach to these matters. The very issues raised by genomic technology are being addressed by the creative application of information technology. As readers, we need to get all angles of progress in this important new frontier.
Arthur L. Holden
Chairman & CEO
First Genetic Trust
Deerfield, Ill. The commentary "Hybrid cars: Less fuel but more costs" (Economics, Apr. 15) makes some good points about the economics of reducing gasoline consumption, citing cost figures from an American Council for an Energy-Efficient Economy study. Raising corporate automotive fuel-efficiency (CAFE) standards to prod carmakers to put existing, relatively low-cost fuel technologies into their vehicles is indeed the cheapest, fastest way to cut fuel consumption. But there's no need to choose between higher fuel-economy standards and hybrid vehicles to reduce America's oil consumption: These are complementary, not competing, strategies.
The arrival of hybrids on the market is an exciting development, and the cost difference between these and conventional vehicles will shrink as electrical requirements for all vehicles increase. We are going to need the full fuel-economy benefits of hybrids--and then some.
Paul Raeburn says that a midsize car can have the mileage improved from 25 to 41 mpg, in return for $1,000 of conventional technology such as upgraded engines and transmission. That would save $300 a year for the Midwest commuter who drives 15,000 miles. This is about a three-year payback. I would pay the extra $1,000, and so would a lot of other Americans, I believe.
However, I don't believe the technology exists. The trade-off one sees to gain mileage is smaller cars and lower weight. That is the reality we have today. If we are starting to see a new reality in the hybrid engines that the Japanese car companies have on the road, I am waiting for General Motors Corp. or Ford Motor Co. to introduce one. I will be a buyer, if it's midsize.
There is another choice that is both economical and efficient, a ready and abundant fuel source in the Americas: alcohol and its byproducts. I have driven in Europe, renting small four-door sedans that were powered by gasohol. In calculating the expense, I discovered that my average cost per gallon was $2.23, and my automobile averaged 46 mpg. In the mid '80s, in Brazil, traveling in European-made vehicles that ran on alcohol, I observed that they were also economical and efficient. Alcohol can be made from beets, potatoes, corn, sugar cane, and many other sources grown here in the Americas. If we reduce our dependency on Middle East oil by 50%, that would certainly help our balance of payments and keep money here for Americans.
Santa Cruz, Calif. For the first time in years, tech companies have been shut out ("BusinessWeek 50" Special Annual Issue, Spring, 2002). It's the very urge to make the numbers next quarter that can get in the way of real progress for the next several years.
Over and over, we see companies not realizing that money held sacred in some departments should be used to make improvements that will leverage continued efficiency down the road--a year away, not a month or a quarter away. Those very companies that didn't make the top 50 were absolutely at the top of the top 50 not so long ago. It is not just the economy; it is how companies respond to an economic downturn.
Boston In "The heavy hand of justice" (News: Analysis & Commentary, Apr. 1), we all know that Enron Corp. execs will go free while Arthur Andersen LLP's are pilloried. And yes, it's "unfair," as Joseph Weber points out. But somebody has to take the fall to send Corporate America a long-needed signal to stop the hanky-panky. And for Andersen to take the fall satisfies a basic perception of most Americans: A crooked cop is even worse than a crooked robber.
Jacksonville, Fla. "New risk from smoking: Your job" (Up Front, Apr. 15) raises an interesting issue about employee benefits. When an employer pays for an employee's health insurance, the worker's private life makes a direct impact on the employer's bottom line, giving employers an interest in employees' private lives.
A lawsuit, as the American Civil Liberties Union is considering, is not the answer. Rather, it would be better to restructure the tax code to give individuals more control and responsibility over choosing their own health insurance. The existing tax structure creates a social expectation that employees receive their health insurance through work, and the natural consequence is that employers will take an interest in any aspect of a potential employee's private life that might affect their benefits cost. If individuals all bought their own health insurance, smokers would have to pay more for coverage, but it wouldn't be their employer's business.
Bowie, Md. After reading "What ails wireless?" (Special Report, Apr. 1), I can only conclude that the American wireless user gets what he pays for. I had many reasons to move here from Europe, but wireless was certainly not on that list. Europe was lucky to have governments (through their national carriers) control the birth of wireless. Commercial players were able to benefit from a single standard and build their services from there. The European customer pays huge prices for wireless, but he loves it, uses it, and is happy. So let's have all these carriers over here merge, agree on a standard, raise prices, and finally give us what we're prepared to pay for.
Los Altos Hills, Calif. Backing up your treasured LPs on CD-R media is a good idea: Just keep that turntable in good condition, because you will be coming back to it ("Turn those old LPs into new CDs," BusinessWeek Investor, Apr. 1).
CDs most certainly do wear out. I have had to repurchase a number of CDs from my earlier collection that have been treated with reasonable care. CDs have been known to wear out in 10 years or less, although I believe the expected lifetime is somewhat longer. Worse yet, CD-R and CD-RW media wear out much faster, in as few as four years. Also, it is important to note that if you keep backups of important information on CD-R or CD-RW media, you should make backups of your backups every few years.
Ellicott City, Md.