One pervasive term plays a role in virtually every major recent economic scandal - either microeconomic or macroeconomic. That concept is called "off the balance sheet." Enron went under because it created hidden special-purpose entities which kept debt off the balance sheet; social security is underfunded in virtually every country because its obligations are off the balance sheet; pension and health-care obligations are bringing companies under because many of them are off-balance sheet. The latest arena where this concept is playing a role is in the Delphi bankruptcy, which we began to discuss last week. Delphi, like General Motors which is its major customer and the hostage of its current insolvency, has obligations to unions that involve billions of dollars, but many of these obligations are off the balance sheet. Balance sheets are an exercise in accountability. Companies produce profit statements every year, and accounting conventions provide a useful and conventional, if somewhat imperfect, way of conveying the firm's performance to investors and regulators. Changes in a company's value can come from taking in more cash in sales than is going out in paid expenses like salaries, rent and payments to suppliers, but also in the form of changes in value of capital and in future obligations. When a company takes out a loan of a million dollars, that amount comes in and nothing goes out but the balance sheet preserves accountability by showing the debt immediately as a deficit item. However, when a company makes a multi-year commitment to workers, the value of this obligation does not appear on the balance sheet. This is a way of escaping accountability. Here's how it works: A promise to workers not to fire them or lower their benefits package for a period of years is worth a lot of money. How much money? We can get an idea from the amount companies are willing to pay workers to waive them. In current negotiations with the United Auto Workers, these buybacks are reported to be in the $100,000 range for health-care givebacks alone. Even so few workers are taking them up. Evidently, the average worker values the total benefit package at a few hundred thousand dollars. The question is, why do workers demand silly, lose-lose concessions like "job banks," which pay excess workers their regular salary to sit idly in huge air-conditioned rooms at GM, instead of demanding really attractive concessions like a few hundred grand up front? I suspect that the answer is accountability - a one-time quarter-million dollar payment to each veteran worker would show up as a huge charge on the GM balance sheet, leading to a certain accounting loss for that year. Instead, the unions and the management agree to make concessions in the form of an obligation that will only need to be paid out in a few years, and even that is only a conditional obligation. This obligation is structured to be "off balance sheet." This echoes the practice of remunerating managers by giving them stock options. These options are worth huge amounts, yet they traditionally do not appear in any way on the companies' balance sheets. Regulators are now catching up to this practice, and I think that parallel deals that apply to assembly line workers should also be on regulators' radar. (After all, a job bank is just a kind of option.) As I wrote last week, I don't begrudge the unions any benefits they obtain through legitimate collective bargaining. But the lose-lose nature of some demands (especially the job bank, which results in huge monetary costs as well as psychological harm to the idle workers) suggests that something is going on beyond a simple balance of power between unions and management. It is important to acknowledge that concessions made to unions and options given to managers are generally transparent and public, even if they have been hidden from the balance sheet. This starkly differentiates them from the mysterious "special purpose entities" of Enron. Even so, it is likely that this legal variety of creative off-balance accounting is a major factor in the crisis threatening GM, "Generous Motors," just as the illegal variety enabled the mischief that brought down Enron, the "crooked E." firstname.lastname@example.org The writer is research director at the Business Ethic Center of Jerusalem (www.besr.org), an independent institute in The Jerusalem College of Technology. He also is a rabbi.