Lessons from the Enron mess

Jan 16, 2002 at 12:00 am

You have to wonder why we never seem to see these horrendous business train wrecks coming.

For years, every TV program seemed to be punctuated by commercials for Enron, the dynamic, fast-growing energy company whose limitless potential was forever being praised on financial talk shows.

Meanwhile, in the auto world, it was fashionable to tout Ford as the one domestic automaker which had things figured. Yes, sir, that was the conventional wisdom, as late as last year. Ford Motor Co. went through anguish and belt-tightening years ago, Pinto gas tanks and all that, but now was a lean, mean competition machine, the experts said.

General Motors was a hopeless bureaucratic mess and poor Chrysler had been taken over by the Germans, after the Deutsche victory in the Cold War. But Ford was just fine, except maybe for that regrettable small problem with those pesky Firestone tires.

Well, if you’ve been wintering in the caves at Tora Bora, let me fill you in. Last week, Ford announced it was cutting 35,000 jobs, closing five plants, and would probably end up having lost $6 billion last year, which is about $750,000 an hour. Every hour of the year, that is.

Meanwhile, not only has the vast Enron Corp. gone bankrupt, its top executives seem to have been quite thoroughly crooked. We have now learned that, undoubtedly having glimpsed the windstorm heading for their house of cards, Enron’s top execs quietly cashed in $1.1 billion in shares over the last couple years. Soon after that, the stock collapsed, wiping out, apparently forever, the life savings of tens of thousands of employees and other little people.

This scandal is sure to spark headlines and investigations, and some Democrats are salivating, thinking this may bring down Bush Minor. To be sure, the administration is not only in bed with Enron; they have gotten the sheets quite sticky together. Bush was a personal pal of Enron chair Kenneth Lay, who helped pay for his inauguration.

But the Enron sleaze masters were more than smart enough to know it’s always better to compromise both sides. They knew that it’s far easier to catch a politician with money than a bear with honey, and they spread the loot lavishly around. They gave more to Republicans, but also a sizable wad to the Democrats.

As the company neared collapse, they gave $100,000 to the Democratic senatorial campaign committee, and another $9,000 to our very own U.S. Rep. John Dingell. Unless some new revelations occur, this is a fundamentally bipartisan mess.

Sadly, this probably still will not get anywhere near the coverage of Bill Clinton’s sex scandals. Though in this case, there is very real human suffering.

What does all this mean? Possibly, that if there is ever a revival of some kind of labor movement, or — dare I say it — an economic left-wing in this country, today’s corporations will deserve an enormous part of the credit.

What this doesn’t mean is that business is, by definition, bad. Calvin Coolidge, a mostly forgettable 1920s president and sort of an intellectual forerunner of the current George Bush, is best remembered for his breathtakingly profound mantra that “the business of America is business.” That statement, which was and is sort of the fundamental theology of the Republican Party, was laughed at for its banality, but has always been essentially true.

Not that this is bad. I know I’m endangering my membership in the Communist Party, but the fact is that honest business is good. Healthy, creative competition is, in fact, why we beat the Russians and have most of the good stuff we have today, from better mousetraps to heart surgery to pretty damn good cars.

Interestingly, from what I know of the biographies of most great business leaders, piling up vast amounts of money was seldom their primary goal. They were mainly more into creation, whether of new products or new companies or distribution systems. Even at their worst, power was generally far more important to them than money.

Naturally, there were, and are, crooks, bad eggs and those who would stifle progress out of greed. Two of them frightened the system once by attempting to corner the market for gold. Even the politicians figured things out by the late 19th century, and passed a series of “antitrust” laws designed to prevent anyone from stifling competition.

They worked fairly well, for a time. But modern communications and multinationalism has given giant corporations power never even imagined before. And at the same time, it was decided, under Ronald Reagan and Bill Clinton, that we really didn’t need much in the way of business watchdogs anymore. Mergers and hostile takeovers that previous presidents of any stripe would have stopped were happily approved under Reagan, who also didn’t see much need to regulate broadcasting.

Under Bill Clinton, alleged man of the people, the law was changed to drop virtually all regulations on how many radio stations a single company could own. Today, a man named Rich Homburg is general manager of both WWJ-AM and WXYT-AM, two stations that allegedly compete for listeners! Imagine if they let Ford, GM and DaimlerChrysler merge and block foreign competition. You’d be paying $50,000 for a bad plastic car in no time. But, oops, I forgot: Greed is good.

The New York Times has just reported that the government is still selling to the general public for $15 documents telling how to make germ warfare weapons! Business of America, indeed.

Vladimir Lenin once said that when the time came to hang the capitalists, they would be only too glad to sell him the rope. Now we know how true that was. “Baseball must be a great game,” someone once said. “It has even survived the owners.” That was true enough, once. I wouldn’t bet on it lasting now.

Jack Lessenberry opines weekly for Metro Times. E-mail [email protected]