Enron Around the Truth

The Enron scandal (and the ensuing unraveling of several other grossly ill-managed and dishonest enterprises) infuriated me because of the way a few greedy and unethical individuals took down not only their own employees, creditors, and shareholders but the very idea of business as a moral and respectable enterprise. Business is too important to our economy, to our culture, and ultimately to our liberty — and exists too close to the edge of revulsion for too much of our body politic — to be left unprotected against that kind of predation.

In a very real sense the ‘conservative’ knee-jerk reaction against regulation is self-defeating. Power — either political or economic — attracts both the corrupt and the corruptible; and, if we resist minimal but effective mechanisms for reining in the worst of their corruptions, then the backlash generated when those corruptions are inevitably revealed will sweep in maximal (and often ineffective) mechanisms in their stead.

That said, the reporting on the Enron scandal was nearly as egregious as the behavior being reported. It was legitimately a story of greed, of corruption, and of a failure of regulation. It deserved to unleash a debate over ethics and corporate governance. It deserved to unleash a debate over corporate regulation. And ‘conservatives’, who have systematically and reflexively objected to the kind of oversight and enforcement that could have prevented such corruption from festering and erupting, deserve a great deal of blame.

But it was also a story that had evolved over a decade or more under both Republican and Democratic administrations in Washington. And, notwithstanding the innuendo and outrage which has been a staple of reporting on the scandal, there is no reason to believe — other than the fact that George W. Bush and Ken Lay, having both been on the Texas social register, knew (and apparently liked) each other — that there was any political involvement or import to the story. Despite the contrary way the media and the Democratic opposition insisted on portraying it, this was a story about policy, not about politics.

I sent this letter to The San Jose Mercury News to object to their coverage of the story. It was not published.

16 January 2002

So let me summarize the plot so far as we know it from the press:

Enron, run by a “friend of George”, gets itself, through mismanagement and chicanery, into financial trouble — apparently fairly public and well-known trouble, since  bankers won’t even return their phone calls.  They become so deperate in their search for money that they call friends in high places, cabinet secretaries and other people in the current government, asking them to intervene with the banks on their behalf.  The government officials, recognizing their ethical obligations (and, perhaps, their political risk) unanimously decline the requests: it is not the government’s business to clean up corporate messes.  Since no action is taken, and since the trouble seems to be recognized and acknowledged within the financial community, these officials see no reason either to pass the requests up the chain of command or to publicize what is already public.  Let the market sort it out without politics.

Later, when Enron collapses and these officials are asked about Enron’s overtures, they tell investigators what happened without obfuscation or apology.

This sounds to me like a success of ethical government. It sounds to me like a refutation of the clamor we’ve heard for the last six months from the news media and the Democrats that the Bush administration is “in Enron’s pocket.”

So why does every news report refer to “admissions” from the Bush administration about Enron contacts, as if they had been caught hiding those contacts? Why do news reporters and analysts depict the Bush administration as “trying to contain the growing scandal” — a scandal that would not exist but for their own speculations? Why do reporters seem rhetorically to smirk and roll their eyes when they ask questions like “Why wouldn’t Paul O’Neill tell the President about Enron’s requests?” — implying that no reason he might give could possibly be legitimate? Why do congressional “investigators” imply that they are going to get to the root of some “conspiracy” and talk about “improprieties” when neither conspiracy nor impropriety are required to explain the facts — and why do reporters repeat their grandstanding blather without critique or skepticism?

Based on the reports so far, there is no political scandal and none is required to explain what transpired. So why are we so intent on creating one? Surely the press is not allowing itself to be used as a partisan political weapon! That would imply — bias!

Or maybe just laziness; or maybe business sense. Scandal, after all, sells newspapers.

Or maybe it is just a mistake. Maybe they will do better from now on…

© Copyright 2002, 2005, Augustus P. Lowell

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