God Bless You Please, Mrs. Stewart

In a shock that surprised no one, Worldcom and Martha Stewart Living Omnimedia, two of America's corporate giants, were recently laid low by their own stupidity. One was a telecommunications giant that deals with pumping data through the arteries of American commerce. The other is a frozen witch-queen who shills Turkish delights and other trifles to the American public. All of this is as surprising as having to kill the bad guy a second time in a B-grade action film: Believing corporate leaders are as ethical as Eagle Scouts is like believing in Santa Claus, the Easter Bunny, or that George W. Bush was fairly elected. However, a comparison between these two scandals might, as they used to say in college, be enlightening.

The WorldCom scandal is a bit hard to understand, but basically, as I grok it from my daily perusal of Salon.com, it goes something like this. Businesses have two types of expenses: Operating expenses (such as salaries, utility bills, Web hosting fees, etc.), and capital expenses (the physical stuff you need to produce your goods or services, such as computers, factories, dump trucks, etc). When you do the spreadsheet for your profits and losses each quarter, operating expenses are deducted from your gross income for that quarter. Capital expenses, on the other hand, can be spread out, sort of like car payments, so that if one year you buy, say, $1 million worth of dough-mixing machines for your bagel bakery, you can figure $250,000 against your first quarter profits, $250,000 against your second quarter profits, and so on. That way, the $1 million expense doesn't make such a big hole in your bagel-making venture.