Enron Ethics

by | Jan 28, 2002

Over the coming weeks, eight congressional subcommittees will hold at least 10 hearings on the collapse of Enron. Rarely has there been such a profligate and irresponsible distortion of congressional priorities during a time of national crisis. Even in peacetime, these hearings would be a waste of time. There is no political issue to be […]

Over the coming weeks, eight congressional subcommittees will hold at least 10 hearings on the collapse of Enron. Rarely has there been such a profligate and irresponsible distortion of congressional priorities during a time of national crisis.

Even in peacetime, these hearings would be a waste of time. There is no political issue to be investigated; instead, the hearings have focused on such grand-scale issues as who made the decision to shred some documents relating to Enron’s finances. In effect, the resources of the United States Congress have been diverted so that a few congressmen can play DA and conduct an ordinary criminal fraud investigation.

But personal grandstanding is not the only motive for the booming Enron investigation industry. The Democrats hope to use this case for a wider cause: to give a bad name to big business and free markets by smearing all corporations as Enrons waiting to happen — justifying the Democrats’ quest for more government controls to “protect the public.”

Enron, they say, is an example of the ethics of corporations and the free market. Commentators have told us repeatedly that Enron’s executives were motivated by “greed” and “selfishness.” A writer in The New York Times quotes a colleague’s summary of the true “Vision and Values” statement of any big corporation: “Why not just come right out and say it? ‘We will strive to make as much money as we can without going to prison.'”

As philosopher Harry Binswanger points out, the premise behind this statement is that lying, cheating and stealing is the best way to make money and be selfish — and the fear of prison is the only disincentive for wholesale fraud and looting. Professor Binswanger goes on to point out that this statement reflects a whole approach to morality. To be principled and moral, in this view, means to sacrifice one’s interests by, say, going into social work or taking a vow of poverty. The logical flip-side is that to be self-interested, to pursue wealth and happiness — well, that requires no principles or morality at all, just a random, range-of-the-moment grab for whatever one can get one’s hands on.

This is the predominant moral outlook today, especially on the left. Ironically, Enron seems to have implemented this view of morality to a T. To enrich themselves, Enron’s executives lied to shareholders and cooked the books to produce fake profits, ignoring the company’s long-term financial problems. The joke was on them, though, because it didn’t work. They didn’t make money; instead, they bankrupted their company and destroyed their own reputations. And they don’t seem to have profited even in the short term. Enron CEO Ken Lay says the reason he sold Enron stock over the last year is that he needed the money to pay his personal debts. He ran his own finances, it seems, just as prudently as he ran Enron’s.

No, Enron executives do not represent the real ethics of self-interest, money-making or big business. They only represented the liberals’ caricature of these values. And no, the Enron approach is not typical of the way businesses are run. Over the long term, profits cannot be faked; they have to be earned.

But there is one realm in which Enron ethics — the view that personal or party advantage is to be gained by dishonest, short-range opportunism — runs rampant: politics. The flurry of Enron investigations is a prime example. The only purpose of the Democrats’ Enron crusade is to maneuver for short-term advantage over the Republicans in the upcoming election — at the cost of diverting attention from the nation’s most important priority.

America has just finished the first stage of what must be a larger war against the governments who sponsor terrorism. It is vitally important for Congress and the president to devote their attention to the deadly threats that still have not been destroyed: the radical Muslims in Pakistan, the weapons-smuggling terrorists of the Palestinian Authority, Iran’s terrorist-friendly mullahs, Iraq’s dangerous dictator, and the growing hostility of our ersatz allies in Saudi Arabia.

The Republicans must take advantage of this opportunity to provide real leadership and rally the American people for a vigorous prosecution of the next stage of the war; I hope the president will do so in his State of the Union speech Tuesday. If they don’t, the gains we have made in Afghanistan will vanish like Enron’s profits. The Democrats, like Enron’s executives, will abscond with their short-term gains. And the public will have to bear the disastrous results.

Robert Tracinski was a senior writer for the Ayn Rand Institute from 2000 to 2004. The Institute promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead. Mr. Tracinski is editor and publisher of The Intellectual Activist and TIADaily, which offer daily news and analysis from a pro-reason, pro-individualist perspective. To receive a free 30-day trial of the TIA Daily and a FREE pdf issue of the Intellectual Activist please go to TIADaily.com and enter your email address.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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