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Wednesday
Jun222011

Enron: The Smartest Guys In The Room

Here’s a fascinating documentary on the remarkable rise and breathtaking collapse of Enron Corp.   All proponents of deregulation and the glorious magic of the market should take a gander at this film, which shows in painful detail just what happens when capitalists are let loose and sectors of the economy that should be run in the public interest are instead run like a huge casino.  

As much as it throws light on Enron’s fraudulent business machinations, the film intentionally works on a human canvass, painting multi-dimensional portraits of the key players, chief amongst them Ken Lay, Jeff Skilling and Andy Fastow.   Skilling in particular is an interesting study, the “visionary” who had the idea to transform Enron into essentially a financial institution which traded in shares of energy.   Skilling always seemed to be overcompensating for his bookish youth by creating an ultra-macho corporate culture in which the worst tendencies of human nature were exulted.   Fastow was the CFO in charge of setting up “special purpose entities” to mask Enron losses from outside scrutiny.  

Of special interest to Californians will be the long section of the film that deals with Enron’s role in California’s power crisis in the wake of that state’s energy deregulation.   That crisis was largely manufactured and exploited to the hilt by Enron.   Enron traders would call power plants and command them to shut down, thereby creating scarcity and driving energy prices up (and of course greatly imperiling the public in the process).   The film includes startling audiotapes of phone conversations between Enron traders: “Burn baby burn,” exults a trader as forest fires ravage California, shutting down a core power line (and thus raising demand, which is a good thing by definition--regardless of human cost).  

We know the sordid end: employees’ accounts were locked while executives cashed out, so that ordinary workers watched helplessly as the product of their lives’ work spiraled down the drain.   Enron stock plummeted from $90 a share at its peak to 40 cents.  

What I find most admirable about the film is that is refuses to allow us to easily point the finger.   It would be easy to sit back and feel superior to these loathsome traders, but the film says that, in a sense, we’re all the problem.   It shows clips from Stanley Milgram’s famous “obedience to authority” experiments from the early 60s, in which 65% of test subjects administered what they believed to be potentially lethal doses of electricity to another person (though not without considerable anguish), simply because they were repeatedly told to do so by an authority figure.   We’ve a capacity to do what we’re told, regardless of human cost.   In the case of Enron, that instinct was married powerfully with another unsavory aspect of human nature: greed.    

The film turns Enron’s corporate slogan, “Ask why”, on its head to become the mantra they want us to go away with.   It interviews a bespectacled trader who seems like a decent guy.   He says that even though he knew what they were doing was wrong, he didn’t ask questions –  because he simply didn’t want to know the answers.  

Most of the reasons why I remain a socialist can be found in this film.   Absolutely essential viewing.   Written and directed by Alex Gibney.

 

- May 6, 2005  

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