In greed we trusted

Robert Bryce's Enron book entertainingly chronicles fraudulent excesses and office sex. But was Enron a fluke -- or capitalism taken to its logical extreme?

By Andrew Leonard

Oct 8, 2002 | The story line is as old as Midas: Greed corrupts; absolute greed leads directly to bankruptcy court. As we contemplate Enron's ascent to Olympus and free-fall into bankruptcy hell, it is all too easy to see the company's corporate arc as a metaphor.

Ain't karmic retribution a bitch? Enron execs didn't just cook their books with their state-of-the-art scams while lining their pockets with hundreds of millions of dollars of ill-gotten gains. As Robert Bryce recounts in his delicious disemboweling of the company, "Pipe Dreams: Greed, Ego, and the Death of Enron," Enron's high and mighty were also guilty of a host of more familiar, venial sins. They thought nothing of sending corporate jets to pick up homesick daughters from Paris, or to shuttle themselves to car races in Canada and the Masters Tournament in Augusta, Ga. They tried to charge their lunch-hour trips to strip clubs as business expenses. They publicly derided Wall Street money managers as "assholes" while simultaneously lying to the press, the public and their own employees. They cheated on their spouses and their shareholders.

And they got what was coming to them. Class action suits, criminal indictments, frozen bank accounts, congressional investigations, national and international humiliation. Story over: The Enron gang grabbed for too much, and they were slapped down for it.

Now Enron is the punch line to a joke, its mighty E sold at auction, its vaunted traders scattered to the four corners of the globe. For writers like Bryce, a veteran investigative reporter (and occasional Salon contributor) who convinced an impressive number of (unnamed) sources to dish him inside dirt, the rise and fall of Enron is a tidy package with a clear ending. Bad people, and, even worse, bad businessmen, sow the seeds of their own downfall.

But the story isn't over. Enron isn't a metaphor, nor is it, as some would have us believe, a "bad apple," a rogue company that was out of control. Enron was the acme of a brand of unchecked capitalism that was almost universally embraced at the end of the '90s.

Bryce recapitulates how the press, the analysts, Enron's board of directors and its shareholders all bought into Enron's vision of itself. There were obvious reasons, as he points out, for the widespread collusion. The analysts worked for companies that also wanted Enron's investment banking business. The directors had companies of their own that were doing deals with Enron. The shareholders loved to see the stock price go up and up, and the business press, well, the business press loves a winner!

But the willingness of investors and analysts and bankers and reporters to go along and get along with Enron has deeper roots. Everyone wanted to believe in Enron's numbers, because more is better. We don't live in a society where 10 percent annual growth or 10 percent return on investment is enough. Nothing is ever enough, growth has to be faster, the profits bigger, the windfall larger -- and if you declare, like Enron, that your numbers are super-duper better than the best, then everyone's happy. No one wants to carp, to be a downer on the American dream.

As Bryce details, there were problems at Enron long before disaster overcame it, but no one outside the company bothered to take a close look until Enron ran out of tricks and was forced to declare a large quarterly loss. Then it all fell apart. If Enron had somehow managed to keep afloat, few people would care that Enron's executives yelled at their employees, slept with their secretaries or moved into really, really big houses. All that stuff is OK as long as you are reporting mind-boggling numbers.

Enron, in fact, is not an isolated case at all. Enron is everywhere. When media companies consolidate, seeking economies of scale at the expense of independence and creativity, it's because their shareholders are always demanding bigger numbers. That's Enron. When investment banks "spin" hot IPO stocks to their biggest clients, the goal isn't to help build a new company, it's to get 300 percent profits after a few hours of trading. That's Enron. When all the rules are lifted, and the government encourages businesses to do as they please, because, gosh darn it, regulation really puts a damper on the profit margin, that, more than anything else, is Enron too.

This is what happens when there are too few rules, too weakly enforced. Enron is no metaphor -- it is the embodiment of capitalism run amok.

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