Monday, May 29, 2006

Enron

Today is Saturday, 27 May 2006.

Due to a phone company malfunction, MoB was unable to post on Saturday. Here now is your regularly-scheduled diatribe.

Two perspectives on Enron, Kennie Boy, and Jeffie the Skell.

1.

Many right-wingers purport to be “orthodox conservative Christians.” In this capacity, they would need to believe in the doctrine of Original Sin: humans, as a whole and individually, are born with an innate bent toward choosing sinful behaviour. Even “accepting Jesus” does not expunge this fact, this bent, in human activity in this world; it only means the acceptor has received pardon from eternal damnation for Original Sin.

Right-wingers are also known for a deep commitment to “law-and-order”: clear and strict laws, enforced rapidly and with scant leniency. It is also a hallmark of right-wing values to oppose governmental regulation of economic activity. They make no coherent argument why the warping effects of Original Sin should be present in, say, armed bank robbing, but not in energy trading.

Were these folks to really believe in “making Jesus Lord of everything,” they would clamor for more laws and regulations, not fewer, regarding human activities, such as the economic, in which overwhelming temptation is so eternally present. Could it be their creed is not “WWJD,” but “What Would Mammon Do”?

2.

After the American Civil War, and largely as a direct consequence, the American economy entered a period of explosive growth which came to be known as “The Gilded Age” (approx. 1865-1901). Its hallmarks were extensive growth of heavy industry, rapid expansion of the railroad network, complete subjugation of the West, and unprecedented economic volatility.

A main cause of this volatility (in addition to the boom-and-bust irrationality genetically encoded within capitalism, and more politely known as “the business cycle”) was the failure of laws and regulations to keep pace with the evolution of economic forms. For example, corporate boards had a free hand to “water” stock, that is, to issue new stock far beyond what was justified by the net worth of the company, thus diluting the value of the existing shares. These boards granted access to the lion’s share of this new stock to themselves and co-conspirators, dumped it on an unsuspecting public desperate to share in the stock market boom, then walked away as the share price crashed.

It would not be until the Great Depression and the New Deal that those who commanded the heights of the American economy could be dragged, kicking and screaming, into a legal and economic world wherein every investor had at least a fighting chance to be treated as fairly as the great magnates treated themselves.

When the Soviet regime collapsed in 1991, the Yeltsin regime began applying the “shock therapy” prescribed by a prominent American economist: dismantling the great state-owned industrial and commercial combines, with the excuse that this would make a return to “communism” impossible. Of course, since there was no new, capitalistic legal framework to govern these fire sales, most of the great enterprises ended up in the hands of their former Party bosses, or their friends, or those politically-connected to the new regime. Should one have been surprised? Your author wasn’t: this is exactly what he anticipated at the time --- the names over the doors would change, but the basic elite domination of the society wouldn’t.

There have been two presidents of the Russian Federation. Yeltsin was once number three in the Communist leadership; he fell from that position when he failed in an attempt to purge and supplant the number two. Putin was a minor KGB thug bureaucrat who wormed his way into the Leningrad “democratic” leadership, and thence to Moscow and a career as Yeltsin’s enforcer, and then heir.

Given the history of the Gilded Age, how could one have expected post-1991 Russian history to take any course but the one it did?

Given these historical examples (and there are many more, such as savings and loan deregulation in the 1980s, and the subsequent looting), how could one reasonably expect that deregulation of energy trading, and letting the industry “police itself,” result in any other outcome but an Enron?

3 Comments:

Anonymous I don't like waffles said...

What, or who, is Mammon?

10:21 AM  
Blogger HH said...

Deriving from a Gospel reference, "Mammon" became, in the Middle Ages, the personification of the demon of greed and ill-gotten gains.

Why don't you like waffles? Ever had a fresh Belgian waffle boat, loaded with fresh berries, and slathered in whipped cream one's just made?

12:29 PM  
Anonymous Hari said...

Just like Mammon used to make.

12:35 PM  

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