Op-ed on insanity leading to Enron crisis

From: MichaelP

MHK Kelly opinion piece on Enron 2-19-02 -- 2000 words

Note to editors:: This piece ran in San Francisco Chronicle Sunday 2-24-02.

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Waving Goodbye to the Invisible Hand: What Enron teaches us about economic system design

Marjorie Kelly, Author, The Divine Right of Capital (Berrett-Koehler, Nov. 2001, www.DivineRightofCapital.com), from which portions of this are adapted; and Publisher, Business Ethics magazine

Sometimes it's the little things that say it all. The little thing that lingers in my mind is the story about Enron's creation, when the original plan was to call it Enteron �� until somebody figured out this was the Greek word for "intestines." There you have it. In the end, the story of Enron's implosion is not about one diabolical company. It's about the guts of our economy.

It's about many gut-level issues that confront us: corporate control of politics, executives getting rich while their company sinks, employees laid off by the thousands, 401(k) plans tanking, messes left by deregulation, a corporate board asleep at the

So what on earth is going on? Given that the government's love affair with big business provides the substance of all the major scandals it has suffered since taking office, why does it keep hopping into bed with corporate power:?

The commonest explanation is encapsulated in a phrase which has been used liberally over the past fortnight: cash for access. The Labour Party's admission at the weekend that it now has an overdraft of pounds6-10million reinforces the impression that Tony Blair will do anything for money. Last week Polly Toynbee argued on these pages that "only an absolute ban on any donations, in cash or kind, will have the public impact to repair Westminster's sleazy reputation."

Her proposal makes sense, but I fear that the problem runs much deeper than that. Corporations in Britain could get what they wanted from the government even if they never gave the Labour Party a penny.

Labour is the rope being yanked in a woefully uneven tug of war. On one end are some of the trades unions, such as Unison and the GMB, led by the people whom Blair attacked on Sunday as "small c conservatives who believe the old ways will do". Alongside them are a handful of pressure groups, such as Corporate Watch, the World Development Movement, Friends of the Earth and Greenpeace, and some tens of thousands of enthusiastic but disorganised protesters. On the other end is just about every institution and individual wielding real power in the United Kingdom.

The anchorman at the end of the rope is the corporate sector and its well-resourced and effective lobby groups. His constant traction results from his adherence to the oldest rule of the game: however much rope you are given, you must always demand more. Blair's government, in response to pressure from the CBI, has granted British companies the lowest corporation tax in the rich world, a planning system which prevents citizens from challenging corporate developers and the laxest environmental standards in Europe, yet still the lobby group bellows that the government is creating a hostile climate for business.

Clinging to the anchorman's thigh, so tightly that it is sometimes hard to tell where the corporations end and the party begins, is the parliamentary opposition. Along the line, less consistent in its force, is the civil service and the quangocracy. In my book Captive State, I published a "fat cats directory", listing 40 senior civil servants and task force chairs, who are charged with regulating companies which once employed them to fight the very measures they are now supposed to enforce. The result is a creeping deregulation of business, despite consistent public demands for the better protection of workers, consumers and the environment. Beside them are some of the most powerful European Commissioners, as well as the heads of foreign governments, constrained, like our own, to demand concessions for their companies from other nations.

The gorilla at the head of the line is the media. Most of it belongs, of course, to major corporations, some of which also have substantial interests in other sectors. They rely for much of their income on corporate advertisers. The proprietors' political project is to create a better world for corporations and multi-millionaires.

Their attitudes appear to have reached parts of the non-commercial sector. Last year, Private Eye published a leaked memo sent to the BBC's director-general Greg Dyke by the business editor Jeff Randall. He attacked a reporter for questioning a corporate executive about high prices during an interview for the Today programme's business report. "Nobody in their right mind would put up with that. It was crude consumerism of the worst kind. ... If that slot is on Radio Four simply to champion the downtrodden shopper, then why not drop the business tag and rename it the Ralph Nader memorial lecture? No serious businesspeople will be interested in listening to, much less participating in, that kind of crap". Since then, "that slot" has been used to give business executives the unchallenged access otherwise reserved only for God on Thought for the Day.

Such is the institutional power of the corporations that the only people now in a position to hold them to account are other companies. When Amnesty International revealed that Indian police paid by Enron were beating and sexually abusing people living where it wanted to build a power plant, the news was received with horror by campaigners but ignored by almost everyone else. But when institutional shareholders lose their investments, the scandal dominates the headlines all over the world.

Governments stay in power by taking the path of least resistance. If Labour sought to fight the stronger force, it would be ripped apart, and the spectators would find another rope for the contestants to pull. Banning political donations merely changes the field on which the contest takes place: it does nothing to affect the disposition of forces. The only way to fight corporate power is the only way democracy has ever been defended: by persuading as many of the spectators as we can to grab the other end of the rope.