Who Killed Global Crossing?
The eternal appeal of demagogy.

March 22, 2002 2:00 p.m.

he preliminary inquiry into the causes of the bankruptcy of Global Crossing brought in a primary distinction: GC, Inc., was not Enron, Inc. Global Crossing's accounting could be criticized for the use of devices that in fact tell less than what, in retrospect, we know we should have wanted to know. But it appears that nothing was concealed, that if the "swap" convention is finally adjudged formally deceptive, blame for using it by Global Crossing is tendentious. The chief executive of the company, John J. Legere, spoke of his company as the victim of an industry-wide slump, aggravated by overcapacity and falling prices.

All of this will get attention, actuarial and political. But the implications of one exchange in the congressional hearing remind us of the eternal appeal of demagogy, as also of the dangers of enacting demagogic impulses. The question was asked of CEO Legere, what was his salary at GC? Legere stalled for a minute, but the congresswoman, Stephanie Tubbs Jones, would have no evasion and asked the question again raspily. Legere answered that his salary was $1.1 million. Jones asked what was the pay of the average GC worker. Legere gave the answer, $79,000. Jones: How many workers could have been kept on if your salary had been divided among them? All that Legere could think to say was that, "as a rule, I don't do math in public."

Congresswoman Jones should endeavor not to think in public. But what she was thinking, or trying to draw attention to, was the politics of envy. The argument ad populum is defined in the reference book, Modern English, as "an appeal to the emotions of the masses. The device is exemplified by the rabble-rouser who avoids presenting rational evidence against a proposition and shouts instead, 'Are we going to let them do that to us?' "

The bankrupt company, whose ambition was to wire the globe with fiber-optic tracery, spent $15 billion during its brief lifetime. Ms. Jones might as well have asked Legere, "How many CEOs could you get if you had hired just them, instead of producing fiber-optic glass?" The question would have been as preposterous as the question she did ask. The cost of the million-dollar executive has very little bearing on the fortunes of a 9,000-man company like Global Crossing. A more intelligent question of Mr. Legere might have been, "If GC had paid $2 million for a chief executive, instead of $1 million, might it have succeeded in getting a better man, whose greater skills might have saved the company?" But that would not have satisfied the appetites Ms. Jones was out there to inflame. She wanted, Soviet-style, to arouse the man who has only one cow by singling out the man who has 20 cows.

The concern for income polarity is both obsessive and thoughtless. The question of the "digital divide" is now fashionable. What it says is that computers have contributed to the polarization of wealth, on the grounds that computers diminish the need for clerical workers who, lacking employment, descend to a lower economic level.

Is this an argument against the use of computers? Mr. Robert Samuelson of Newsweek magazine reminds us that the use of computers is no longer the reserve of the wealthy — there is now a computer for every four schoolchildren in the United States. Those who seek class antagonisms could theoretically argue that education itself is a polarizing agent. If it is true, as we are required to acknowledge, that someone with a college education earns almost twice the income of someone who doesn't have the higher education, would Ms. Jones find that an argument against colleges? Education is the primary polarizer, others being industry and intelligence.

The Global Crossing collapse hurt a great many people, the most conspicuous victims being the 9,000 workers who found themselves jobless. Also, the however-many it was who put up $15 billion. But — and in this respect, Global Crossing and Enron do have something in common — a joint casualty is the encouragement given to such as Representative Jones to flame out with her demagogy.