Four different news items coming along during the past two days have coalesced into a strange thought. All three stories involve the financial relationship between government and business.

The first story broke on Wednesday. In a press release, the Department of Justice announced the indictment of Raoul Weil, a senior executive of an international Swiss bank, for allegedly conspiring with other persons to assist approximately 20,000 taxpayers conceal $20 billion of assets from the IRS. The indictment charges Weil with ordering his employees to enlarge this line of business, even though he knew it would cause them to violate the law. These practices generated annual income of $200 million for the bank. Weil and others at the bank used nominee entities, encrypted laptops, and counter surveillance techniques. More than 3,800 trips to the United States were made by the bank's employees to assist the U.S. taxpayers in dealing with their Swiss bank accounts. Those clients filed false tax returns, omitting the income earned on those accounts and failing to disclose their existence.

The second story has been developing over the past several weeks, and every day brings a new wrinkle. In Potential grows for lame-duck session of Congress, three CNN correspondents explain the twists and turns through which proposals to provide additional assistance to domestic auto manufacturers have journeyed. Though the proposals are as varied, ranging from funding the Big Three's health care costs to supporting a re-tooling to manufacture energy-sensible vehicles, the reaction has generated a divide between those who see additional assistance as opening the door to a bailout of every industry and those who see financial failure of even one of the manufacturers as the trigger for a catastrophic economic collapse.

The third story also broke on Wednesday. As reported in numerous places, including this report, the Secretary of the Treasury announced that none of the $700 billion provided by the bailout legislation would be used for the purposes for which the bailout legislation was enacted, namely, the purchase of mortgage loans and mortgage-linked securities. Instead, the money has been used to purchase stock in banks and to assist AIG. The Secretary of the Treasury noted that perhaps non-bank financial institutions not currently within the scope of the program would be assisted through capital acquisition, including life insurance companies, and property and casualty insurance enterprises. Other plans include some ill-defined concepts of increasing liquidity for certain areas of the credit markets and for supporting new securities lending.

The fourth story, Nutter Goes After Top-50 Business-Tax Ddelinquents, reports that the largest unpaid Philadelphia business tax bill is owned by a defunct medical business, one of whose principals is now practicing through a separate entity. In Physician Says He's Trying to Heal Himself of Tax Mess, Gregory Nelson explained that the former business ceased to exist because of tax problems, though it is unclear if it declared bankruptcy. He attributes the failure to pay taxes as the outcome of trying to provide medical care to patients in poor areas of the city, to the consolidation of the health care industry, to reduced insurance reimbursements, and to higher medical malpractice insurance premiums. In addition to the city taxes, Nelson and his former business have both been named in filings by the federal government for failure to pay over employee withholding taxes. According to the article, the government produced evidence that Nelson earned $800,000, and after Nelson pleaded guilty to wilful failure to pay taxes, he continued to spend money on a center city apartment, a fur, and overnight stays at one of Philadelphia's best hotels. Evidence also showed that he owned more than $300,000 in commercial real estate, an automobile worth more than $50,000, another costing roughly $80,000, and a family home worth roughly $600,000, which eventually was sold in a sheriff's sale. The court had ordered Nelson to live on a set allowance and use the rest of his income to reduce his tax debt, but he did not do so. The city of Philadelphia put his business into receivorship in order to obtain some of the unpaid taxes. At present, the unpaid balance exceeds two million dollars.

When these four stories are considered against the backdrop of how citizens relate to the government in a financial sense, it is not difficult to see how that relationship has gone awry. Some industries that mismanage themselves or that make bad decisions, such as the mortage lending business and the automakers, find ways to get back from the government amounts that are sufficient to eliminate tax liabilities and to cause cash paid by other taxpayers or borrowed from abroad to flow into these industries. This encourages other large industries to jump onto the bailout bandwagon. Other businesses, generally much smaller, convinced that they are not in a position to lobby for similar breaks, take it upon themselves to engage in self-help bailout by ignoring their tax liabilities. Facing what they claim are adverse conditions, they choose to put governments at the bottom of the list of bills that they plan to pay. Their claims of adverse conditions are not unlike those made by the industries that have obtained and that are seeking bailout money, both in terms of the nature of the circumstances and in the inability to accept blame or responsibility for their own actions. In this respect, all of them mirror modern culture, in which the game is to blame everyone but one's self. The mortgage industry blames Congress for the fraudulent and irresponsible lending practices in which it engages. The auto industry blames consumers for its decisions to manufacture vehicles that are energy inefficient even though somehow the Japanese and certain other car companies managed to avoid taking the same path.

Yet another similarity exists between the taxpayers who choose to evade taxes by hiding assets and income or by ignoring tax payment obligations and the industries that claim receipt of bailout money is essential not only to their survival but to the economic health of the nation. Somehow, though presenting a picture of financial misery, the captains of these industries enjoy the same luxurious life style as that in which the tax evaders engage. Executives of AIG were enjoying visits to a high-end resort while present and future taxpayer dollars were bailing out the company. Taxpayers stashing assets in secret Swiss bank accounts continued to enjoy the good life. Someone who chose not to pay federal and city taxes because of alleged financial difficulties managed to own multiple commercial properties and to make high-end purchases.

All of this suggests to me that the problem isn't financial, economic, or monetary. The problem is cultural. The "me generation" has taken root deep within society and most of its institutions. The same mentality that lets some people think they can jump the line by going straight out of the left turn lane causes too many people to think that they are entitled to whatever they can grab and to hang onto it despite laws requiring true freedom in the markets, the payment of taxes, full disclosure, and honest transaction structuring. It's too easy for those acquiring wealth to overlook the contributions others have made to their so-called success. None of this should be surprising. The professor who taught my American Civilization course when I was at Penn, whose international stature escaped me until I read his obituary a few years ago, predicted this outcome. There is a sadness in how quickly the nation evolved from one in which its greatest generation, sacrificing to ensure the nation's survival through depression and world war, predominated to one in which a the country is overshadowed by so many who did not learn the value of sacrifice and the long-term disadvantages of greed.

The solution isn't one of bailouts, tax law changes, or government purchases of ownership in private enterprise. The solution is one of education, the teaching of lessons about short-term and long-term analyses, about the benefits of sacrifice and the evils of greed, about the complex interconnections that make personal wealth accumulation futile in the long run, about the values of cooperative endeavor, about appreciation for how no one succeeds without the assistance of others, about the benefits of truth and the dangers of manipulation, and about the inadequacy of money grabbing as a solution for psychological insecurities. Where and how that gets done is a challenging question. Whether it could be done with sufficient alacrity to avert the next economic manifestation of the underlying problems is problematic. But someone, somewhere, somehow, needs to step up and persuade the American nation that bailout after bailout isn't going to have much more beneficial effect than putting band-aid after band-aid on a stab wound. Slowing the bleeding isn't enough. Stopping it is necessary. And that cannot happen if knives continue to be plunged into the national fabric.
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