Another notable trend of 2002 was the demonization of America’s largest corporations, following the scandals at Enron, WorldCom and elsewhere. “The American state’s reaction to the so-called business scandals was to bring business executives before congressional kangaroo courts where self-righteous politicians made them feel guilty of something, and, then, adopt the Sarbanes-Oxley Act which … ‘criminalizes accounting mistakes,'” writes Independent Institute research fellow Pierre Lemieux. Corporations would be better governed, and less susceptible to malfeasance, if the government would stop giving shareholders false assurances and hampering the ability to monitor them. “The main problem with Enron, WorldCom, and the ‘mixed economy’ in general,” writes Lemieux, “is that much free-market signaling has been short-circuited by state intervention. How did 19th-century capitalism work with virtually no legislated standards of accounting or financial disclosure? … How were investors able to evaluate corporations? The answer is simple: a firm signaled that its earnings were real by paying dividends. This signaling device now works very badly because of tax distortions: dividends being taxed at higher rates than capital gains, shareholders prefer the latter. While the average dividend yield on stocks was 5.8 percent in the 19th century, it is now less than 2 percent.” Lemieux concludes: “The attacks against ‘unethical’ corporations point mainly not to flows in capitalism but to state failures and to the continuing anti-capitalist witch-hunt.” See The Anti-Capitalist Witch-Hunt by Pierre Lemieux (THE LAISSEZ FAIRE ELECTRONIC TIMES, December 23, 2002) ”THE LIGHTHOUSE is edited by Carl P. Close and is made possible by the generous contributions of supporters of The Independent Institute. The Independent Institute can be contacted by phone at 510-632-1366, e-mail at” ”or snail mail to The Independent Institute, 100 Swan Way, Oakland, CA 94621-1428. For previous issues of THE LIGHTHOUSE, see” ”For information on books and other publications from The Independent Institute, see”