ENRON, ONCE THE NEW ECONOMY'S SHINING STAR, IS NOW ITS GREATEST SHAME. THOSE WHO PLACE THE BLAME ON EXECUTIVE GREED MAY BE MISSING THE LARGER POINT
In happier times the Enron corporation used to run a TV commercial in which a clever young executive punctured the pretensions of a panel of windbag politicians with a single sharp word: "Why?" It was supposed to be a thirty-second demonstration of the populist wisdom of electricity deregulation: Anyone could see that our legislators were arrogant fogies who kept us from having economic "choices" simply because they thought they knew better than the people.
These days, the clever young executives of Enron are taking the Fifth, not cracking wise at the Man. And the notion of Enron acting in the public interest--of Enron acting in anyone's interest other than that of those same clever young executives--can only register as a sort of sick joke. Consider just the stories that have made the front pages over the past few months. Thanks to the failure of a series of shady accounting tricks, Enron had to amend its profits for the past few years by hundreds of millions of dollars. Naturally, this destroyed investors' faith in Enron management, causing a catastrophic drop in the company's share price and a downgrading of its debt rating, leading immediately to bankruptcy. Enron employees, who had been encouraged to buy shares right up to the end, found they were not allowed to sell and watched helplessly as their 401(k)s were wiped out. While encouraging their workers to stand pat, top Enron managers were unloading the soon-to-be-worthless stuff as fast as they could.
Then it was the turn of Arthur Andersen, the accounting firm that had OK'd the fatal transactions, and whose managers were discovered feverishly shredding Enron-related documents. Before long Andersen found itself indicted and hemorrhaging clients. The chain reaction soon spread over the rest of the corporate landscape, where Enron had long been regarded as a leader in the field of clever accounting tricks. Copycat bankruptcies broke out. Markets drooped sorrowfully.
This would be enough to seal the eternal disgrace of most companies. But the Enron story only got worse. We are accustomed to associating corporate interests with conservatism, but Enron seems to have had its own ideology, a swaggering free-market evangelism that it promoted not so much by argument as by financial might. Enron not only bankrolled pundits and endowed university chairs in economics and political science, but it ingratiated itself with those very politicians it gloried in mocking in its ads. Forever pushing for the deregulation of the various fields in which it operated, the company gave campaign contributions to nearly half the members of Congress. Its influence in state legislatures was sufficiently great that journalists now speak of Enron as the main force behind the movement for electricity deregulation that swept the nation in the late 1990s. National politicians received seats on the Enron board after doing their good deeds for the company, while others were rotated from Enron into the upper echelons of the Administration. And, as everyone now knows, George W. Bush was Enron's special pet, nurtured on Enron money, Enron jets and Enron connections. He had been in office for only a few weeks before the favors that Enron paid for began to flow: friendly appointments, special consideration in energy policy-making.
Right up to the end, Enron was described in the exalted realms of management theory and business journalism with virtually unmodulated adoration. Fortune compared Enron to Elvis. Superguru Gary Hamel, who devoted a section of Leading the Revolution to the company, waxed enthusiastic about Enron's "genius for innovation" and its "capacity for revolution."
The effect of this has been to promote what could have been a simple tale of corporate crime into the staggering revelation that everyone you listened to in the New Economy years was either a liar or an ignoramus. …