The Enron Scandal: A Guide

Published January 16, 2002

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Judge not according to appearance, but judge righteous judgment.  John 1:24

The ability to think rationally is pretty rare nowadays, even in prestigious universities.  We’re in the TV age now and people think by linking images in their brains.  Neal Stephenson

It’s official now: the Washington Post’s Howard Kurtz says that the media are in “scandal mode” over the Enron collapse, and his call is being cheerily echoed by New York Times investigative reporter Don van Natta and various Democratic Congressional staffers.  The facts of the matter remain unclear – though there’s every reason to believe that Enron, like every major corporation, did its best to buy the favors of anyone who might affect its interest, regardless of party – but given the way that scandals have developed in Washington over the past couple of decades, the facts probably won’t matter much anyway.

What does matter is spin, and the ability to manipulate the press and the appearance-game that passes for political ethics in Washington.  With that in mind, and with history as a guide, I offer the following predictions:

1.  There will be no smoking gun.  Why?  Because there almost never is.  There are two reasons for this.  First, spin-doctoring has gotten so good, and the media so gullible, that nothing short of an actual smoking gun counts as a smoking gun anymore.  (Gifts of cars, suits, watches and so on to Sen. Robert Torricelli from a man with legislative interests were excused as “friendship” gifts, though, as several observers have noted, not many men actually buy each other clothes, cars, or jewelry out of friendship).  But more importantly, political business is seldom done in a straightforward enough fashion to generate smoking guns.  Contributions are made, and favors are granted, but the connection between them is kept carefully vague.

2.  The issues will soon disappear into a fog of technicalities: Instead of meaty issues like bribery, extortion, or fraud, the “scandal” will soon revolve around campaign-finance rules, obscure provisions of the Ethics in Government Act, and the like.  If there is no serious wrongful conduct, these issues will be raised by accusers trying to generate a scandal where no scandal should exist.  If there is serious wrongful conduct, these issues will be raised by the accused, in an effort (likely to be successful) to ensure that actual bad behavior is obscured by a smokescreen of technicalities.  In short order, any moral component to the issues under dispute will have been forgotten.  One might almost suppose that the rules were designed with that end in mind.

3.  People will benefit, and people will suffer, but they will usually be the wrong people.  The people ensnared in the obscure technicalities, and thus most at risk of actual jail time, will not be the main actors but rather bit players who somehow wind up as pawns of the powerful.  Meanwhile certain politicians, pundits, and journalists will achieve prominence for reasons that afterward will never be entirely obvious.

4.  In five years, no one will remember this.  Well, no one except political junkies, and even they will have trouble keeping the details straight.  (Don’t believe me?  Try naming all 5 of the “Keating Five” and explaining what they were supposed to have done wrong; explain the Jim Wright scandal; tell me what the prosecution of James Beggs was about and why he was acquitted.  No fair using Google.)

And the most important (and surest) prediction of all:

5.  The real scandal won’t  be addressed.  As Michael Kinsley once observed, in every political scandal the real scandal isn’t what’s illegal: it’s what’s legal.  The scandal that is never addressed is that influence-buying and influence-selling go on in Washington all the time.  They are not unusual, but common – and so are sweetheart deals, dubious “gifts,” and excessive “friendship” between the regulators and the regulated.

There’s no surprise here.  With the federal government’s finger in so many pies, it would be astonishing if the people it regulated didn’t try to influence it.  (And much of the influence-buying is really a form of extortion: everyone knows that if you don’t buy influence, you’re far more likely to find your company or industry targeted.)

This should come as no surprise either.  The government attracts people trying to influence it the way honey (or, ahem, other fly-attractors) attracts flies.  The bigger the government, the bigger the pile of, er, honey and the more flies it attracts.  Most political ethics laws are the equivalent of putting up screen doors or handing out flyswatters: try all you want, but the flies will still get through.  If you don’t like flies, you’ve got to do something about what’s attracting them.

People realize this.  Jonathan Rauch has a wonderful graph in his book Government’s End: Why Washington Stopped Working.  It plots public trust in government against the number of pages of new laws enacted each year.  They’re almost perfect reciprocals: as more laws are enacted, trust goes down.  In a not-unrelated development, he also notes that as government power has expanded, the number of lobbyists in Washington has grown along with it.

This connection between government size and governmental corruption should be obvious, and Enron’s bipartisan efforts at influence-buying certainly bear it out, but it seldom comes up in public discussions of government ethics.  I suspect that’s because most of the people who take part in those discussions are so invested in big government (journalists who cover Washington have little to gain from smaller government, nor do politicians, lobbyists, lawyers, or even academics who study government ethics) that they find it hard to acknowledge the role that government size and intrusiveness play in government corruption.  Instead they look for magic bullets: the right rule, the right statute, the right special prosecutor.  These don’t solve the problem, but they let the chattering classes keep chattering.

And that’s my final prediction: don’t expect the people who benefit from the current sad state of government ethics to come up with any useful proposals for actually improving things.  You might as well expect flies to come out against honey.

Glenn Harlan Reynolds is a law professor at the University of Tennessee and publishes InstaPundit.Com.  He is coauthor, with Peter W. Morgan, of  The Appearance of Impropriety: How the Ethics Wars Have Undermined American Government, Business, and Society (The Free Press, 1997).

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