Dewey: “It bears repeating, yet again: I have no problem with inquiries into who influences government policy. But to call out Enron specifically is basically to bootstrap that inquiry from the Enron collapse. It suggests that, instead of a general desire for government transparency, the reason for such an inquiry is the collapse itself, not. That is what is dishonest here.”
And it bears repeating that your reasoning here is flawed on three counts: first, because it ignores the simple fact that Enron’s collapse has caused popular attention to focus on who influences government policy; second, because it assumes that those inquiring into Enron lack “a general desire for transparency” (when all the writers I’ve cited are calling for precisely that); and third because you ignore the possibility that Enron’s collapse bears–as Krugman and many others argue–in a historical sense on the matter of corporations’ success in influencing government policy in ways that allow them, in effect, to regulate themselves.
Now in what’s below you exemplify your extremely narrow perspective on the matter. You reject my analogy between public inquiry after Enron and public inquiry after 9/11 because:
“Afghani history might have some conceivable bearing on terrorism in general and 9/11 specifically. Studying Enron’s lobbying efforts throws no light on the accounting irregularities that led to Enron’s collapse (indeed, a study of Andersen’s lobbying efforts would be more germane to the Enron collapse than anything Enron had to say on the NEP).”
Sigh. Naturally Andersen’s lobbying efforts will have more to do with accounting practices than Enron’s–which focused on energy.
Once again, there is no need further to repeat the prongs of your argument. The reason your argument fails to persuade is that it ignores a deeper difference in opinion. That is, while you (apparently) would be content to tweak some accounting procedures, many people see this collapse as exemplifying the need to reject the pseudo-orthodoxy of free markets and laissez-faire, to regulate more (and/or more effectively) at many levels. You reject this as being too broad a response to what–as you see it–boils down to a specific set of failed procedures. But your view of the matter is very narrow and proceduralist and ignores the larger questions at stake: e.g, do corporations have too much power? does that power corrupt the political process? And yes, what can Enron teach us about these larger issues?
You claim to understand the legitimacy of these questions but refuse to accept inquiry into Enron as bearing on the matter. This is an all but worthless debate since it comes down to how “Enron” is defined. Your comments above demostrate how narrowly you define it: you distinguish between investigating Enron and investigating Andersen. Fair enough–if what’s being discussed is which specific executives or companies ought to be penalized, which procedures were the most reprehensible. etc.
But insofar as broader questions of corporate influence are concerned, Enron/Andersen are two companies that collaborated to bilk investors. When I speak of “Enron” I speak of the Enron story which would include Andersen, the political history of Enron’s rise in Texas, energy deregulation, laissez-faire, electoral reform. You reject this view as being too imprecise; the risk, as you see it, is to throw out the baby of good policies with the bath water of certain bad procedures.
Perhaps but, as I’ve suggested before, it makes more sense to pursue this line of argument by vindicating what you still adhere to (energy deregulation? George Bush? neo-liberalism?) then to attempt to invalidate a (perfectly sound) logic that would raise “Enron” as an example of the need for a broad-based reassessment of corporate influence and untrammeled corporate power.
“Oh, and re: Krugman’s columns – his analysis is just ridiculous. He hand-waves about the “Enron experiment” (whatever the hell that means) and the fact that Enron pushed for deregulation, but never bothers to explain how that deregulation ties to accounting that caused the Enron failure. That is just a colossal missing premise in the whole argument.”
Okay, well it’s good to know that this is how you feel about Krugman’s arguments. It has helped me to understand just how narrow and contextless your understanding of what’s being debated is.
"You keep trying to psychoanalyze me as a deregulatory zealot. "
Say what? I charge for that kind of treatment!
Seriously, Dewey, I don’t see you as a deregulatory zealot at all. Rather, I see you as someone reluctant to lay his ideological cards on the table. I’d be the same if I were trying to argue your position ;).
“While it’s true that I generally favor free-market approaches, I’m hardly a laizzez-faire nutcase. You, on the other hand, appear steadfastly determined to make the Enron failure a cause celebre in your own anti-deregulation zealotry.”
Oh, I see. So now you’ve laid your cards and they consist in this: you are not a nutcase but I am. Well, no. FTR, I don’t support five year plans, socialization of all private industry, and the bureaucratization of everything. I do strongly disagree with energy deregulation on environmental as well as economic grounds. But I don’t, for example, have any major beef with deregulation in telecommunications.
My opposition to laissez-faire is predicated on two broad pillars: a) I believe that is has never actually existed in the quasi-religious form that its advocates describe it. It is a myth and its errors can be traced all the way back to the bad readings of Adam Smith often invoked in its defense; b) I believe that to the extent that is has ever existed, it is untenable. Historically, unchecked capitalism always leads to instability including even civil war. Capitalism not only cries out for regulation–in the interests of citizens–it also ultimately depends on it for its own well-being. Laissez-faire, to wit, is an adolescent fantasy, and, in the short-term, a mask that functions to allow periods of plutocratic bilking of the public at large.
“Look, I’m perfectly willing to listen to arguments against deregulation (hell, sometimes I even agree with them). But if you’re going to use the Enron failure as an argument against deregulation, you need to establish cause and effect. Show that deregulation caused (or that a given type of regulation would have prevented) the Enron failure.”
Well, if you’ve read the articles I cited you’d know that several quite specific arguments and recommendations were made in them. From Greider’s article:
“The most important reform that could flow from these disasters [and, btw, Greider discusses Lucent and Global Crossing in addition to your favor bete noire] is legislation that gives employees, union and nonunion, a voice and role in supervising their own pension funds as well as the growing 401(k) plans. [see article for details].”
He goes on to attack the “supposedly independent watchdogs in the system”–e.g., directors on corporate boards. According to Greider these are “a well-known sham–typically handpicked by the CEO and loyal to him, even while serving on the executive compensation committees that ratify bloated CEO pay packages.”
Then he discusses Andersen is being typical of Big-Five accounting firms and criticizes the fact that these are not properly regulated since “an industry-sponsored board sets the arcane accounting” rules for determine whether profits are real or not.
“This egregious conflict of interest,” he argues, “should have been prohibited long ago,” and in the wake of the present scandal he calls for the creation of public auditors, “hired by government, paid by insurance fees levied on industry and completely insulated from private interests or politics.”
He then goes on to offer an important prong in the very argument that you want to discount: i.e. that Enron’s particular operations are connected to the trend towards so-called laissez-faire. Public auditors actually aren’t a radical idea, he says, since commercial banks are already regulated in this fashion.
“Because that banking sector lost its primary role in lending during the past two decades, the same public auditing and supervisory protections should be extended to cover the unregulated money-market firms and funds that have displaced the bankers. Enron is unregulated, though it functioned like a giant financial house. So is GE Capital, a money pool much larger than all but a few commercial banks. Mutual funds and hedge funds are essentially free of government scrutiny. So are the exotic financial derivatives that Enron sold and that led to shocking breakdowns like the bankruptcy of Orange County, California” [My emphasis]
Now, back to Dewey: “Because as it stands, all I see is hand-waving and glittering generalities.”
Well actually, I think the articles I’ve posted, including the one excerpted above, offer sophisticated and quite specific arguments. That you have ignored them entirely—possibly not even bothered to read them–suggests that the hand-waving in question is primarily your own.
Dewey returns to Krugman:
“He’s bitched about deregulation loudly and often, and he’s complained about the accounting rules that allowed the Enron collapse, but he’s never tied the two together in anything but a hand-waving sort of way.”
To be sure, Krugman’s writing short columns; but Greider’s article is longer and more detailed. I asked you specifically to speak to the legitimacy of its arguments. I’ve said that I would take your specific dissent very seriously. So far you’ve chosen not to.
“[My citing Krugman is] a blatant appeal to authority, a logical fallacy. I don’t mind citing to columnists for facts, but your analysis should be your own.”
Say what??? Dewey, appeals to authority are only logically fallacious when the experts in question have no expertise in the area. Since he is an economist, academic and (IIRC) one-time member of Enron’s board, I’d say that appealing to Krugman’s authority makes a lot of sense. My analyses are always entirely my own–but, I want to warn you in advance–always based on information and opinions culled from the best authorities I can find. (If you like I can go down to the local sports bar and pick up a few ideas from there, but, as things stand I think we’re better off, logically and otherwise, with my appeals to informed economists and journalists.)
Consider where each of us appears to be coming from. That you appear to be professionally involved with securities management in some fashion (lawyer? broker? accountant?), and that your wife is involved in Big-5 accounting certainly gives you personal experience to draw upon. OTOH, it also gives your personal stake in this argument a rather obvious tinge. (BTW, I sincerely sympathize; that is, I can imagine how annoying it is to have one’s profession under scrutiny, and having every Tom, Jane and Harry assume that you personally are a crook because someone else who does your job appears to have been one.)
As for me, I am a historian: I have a certain amount of expertise in the history of capitalist and regulatory developments in the West though it’s not my prime area.
As such, I’d be very happy to to engage in bona fide discussion with you (and the others in this thread) about what you find lacking in the analyses I have offered–and I’ve been urging you to do that for the last several posts. But one thing I really don’t need from you is any childish pretense on your part that I lack the logical skills adequate to this task.
“By the way, this is the same Krugman who wrote “I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.” Yeah, Paul, sure, whatever you say.”
Actually, speaking as a historian, I think that Krguman’s prophesy may have something to it, depending, of course, on what happens in the wake of Enron. (I could explain this further if you wish.) I agree, though, that his column on that subject sounded amateurish. Like most people, he’s better at making arguments in his own sphere of expertise.
[on energy deregulation being a thing apart from Enron’s collapse; “All other things being equal,” I’d said…]
"What you seem to be saying here is “you’re right, it really shouldn’t matter who proposed the policy and the policy really should be evaluated on its own merits, but we’re gonna go ahead and try to tar the policy with badness of the proposers anyway. It’s not right, and it’s not fair, but there you go. Tough toenails for you.”
Actually, what I said was that to avoid this problem you should start a thread on energy deregulation and specify that it is not a referendum on Enron. But if you prefer to hear that as “Tough toenails for you,” well then tough toenails for you.
Oh, and sorry, Dewey. I don’t use the quote tag when I post as I find it easier, and more elegant, to insert and edit my own code.
[Seriously, I think you pasted in the wrong link here.]
).