Democratic Underground

The Dog Ate My Homework
January 19, 2002
by Jeremiah Bourque

Practically no six hour period passes anymore without a report coming out about "The Next Enron." Translated from lingo into English, this is to say, "The Next Big Stock Market Fraud Supported By Fraudulent Accounting."

What are we to make of one of the Big Five accounting firms actively shredding documents, finding an Oct. 12 memo that clearly states that this is what supervisors wanted and required? Even a two-bit accountant fears audits and will not throw away papers, let alone if there is interest in a particular individual for tax purposes or the like. Knowing that Enron was in trouble, indeed, with the proof right before their eyes, and with the full knowledge that not only the SEC, but other organizations, were interested in those documents, they shredded and erased anyway.

For some reason that escapes me, there are people who still trust corporations blindly.

As the title suggests, this article is about the Bart Simpson, "I didn't do it," craze in conservative thought on the issue of Enron. The collapse is simply not seen as an individual failure. Indeed, the engineers of Enron's collapse are seen as wise, aggressive investors who cashed in when they could, beating the rush as wise men can. There is no contemplation of the idea of using insider knowlede to do this. Rather, the collapse of this once-great corporation was, and is, due entirely to outside factors, in particular, the incompetence of the Clinton administration in governing the economy, the mistakes made by Alan Greenspan, and the dynamics of the free market, which are above the power of any man to control (save by brute force and this is evil incarnate).

Thus, in this view, Enron's collapse is seen as a sort of karmic inevitability, a sacrifice on the altar of the genius of market capitalism, not so much a human failing as a twist of fate. This strongly smacks of Calvinist predestination. For that reason alone, I am very disappointed to see such logic used by the Wall Street Journal, among others.

To quote a certain Lieberman, "This was not a natural death."

It has occured to me that Republicans like O'Neill, our beleaguered treasury secretary who tends to be much maligned on Wall Street now that he gets to open his mouth more instead of hide behind PR spokesmen at Alcoa, know that there are laws against the use of insider information, laws that date back to the 19th century. They cannot, however, understand exactly why this is so.

In the mind of the elite Republican, the problems at Enron were known long before the stock market collapse. This is because of two reasons.

First, God, knowing all, knew that Enron had accounting problems. This, it is wrong to say that no one knew about them; God did.

Second, the collective consciousness of the market place, by definition, knew. This is because the market represents the sum of all human knowledge concerning all financial things. Thus, the market knew about the problems, to the extent that any collective consciousness short of God could. Therefore, it is wrong to say no one knew about the problems; the market did. It had to have. There is no other option.

Thus, between God, and the marketplace, which in the minds of a believer, are two separate things, Enron's problems were neither mysterious nor odd. The genius of the marketplace, and God's divine plan, made it possible for those who owned Enron stock to know the maximum that anyone could possibly know. They simply chose to ignore the signs, whereas insiders chose to sell stock, the selling of which was not secret.

Consequently, what's the problem? This is how the system works. Suck it up.

As I said, this is clearly Calvinist predestination at work. Braggarts who arrogantly pushed their Enron stock as signs of personal virtue (ala Rand) now are financially hurt, but if not they, then at least their intellectual brothers and cousins, admonish that this is the way things are meant to be. No human can change the workings of the market; it is foolish to try. Bad companies will be weeded out by the marketplace. There is no place whatsoever for the government. Period.

Surely the so-called robber barons would wholeheartedly agree.

After all, what is the underlying purpose of the SEC (currently under hostile takeover by the accounting industry), financial disclosure laws, public audits, and enforceable codes of ethics? The purpose, of course, is to protect the little guy from being impoverished by the abuse of insider information, to be blindsided by information that ought to have been in the market.

To the elite Republican, such a concept is simply wrong. Why should the little guy be protected? He should be as naked and unprotected as rich investors are, willing to take his lumps, sink or swim, and above all, diversify. If anything goes wrong, it's his own fault! It's his money, and no one but the Lord has any control over what the outcome is besides himself.

Don't blame wiser, more aggressive, richer, better men for getting out first. The likes of Kenneth Lay are living the American Dream, courting failure and therefore, most of the time, being successful. They are proven winners, enjoying success wherever they go, showing their shrewdness in all things. How dare the government presume to even inconvenience these men! Protecting the weak at the expense of the strong weakens society, economically as well as socially. Protections written by the government to shackle corporations from being aggressive, innovative, and to take success or failure on their own shoulders and that of their freely, and of their own will, risk-taking investors, ultimately ruin economic prosperity. So why should they even exist?

Consequently, these Republicans find very little reason to try to enforce laws relating to fraud, embezzlement, falsifying financial statements, destroying evidence, obstruction of justice, and violation of fidicuary duty. When it's about sex, it's an outrage. When it's money, it's just business.

This attitude is being reflected far and why across the conservative mainstream, permeating every sanctomonious declaration of Clinton or Ann Richards or the liberal media or Alan Greenspan deserving the blame for the Enron debacle. Market forces, government forces, media forces, legal forces, chance... all are being blamed first. Since to the conservative, these are all credible, there is no forcing to look at the very last item on the list, which, if all others are discounted, must be responsible: Enron itself.

Though obviously influenced by religion, there is also a fair bit of the temporal tendency to defend the wealthy by knee-jerk reaction, since, according to ideology, they must be the superior men, and, consequently, ought not be condemned by society, nor persecuted for simply trying to make money, which is a much higher goal than that which regulators can ever strive for. In the end, there is simply a refusal to lay blame where blame belongs, and to recognize that there is, truly, such a thing as financial fraud, and that it is bad.

It's hard to expect any better from these "conservative" writers anymore. For them, the dog is not eating the homework.

The dog is writing it.

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