Will the Societal Effects of Enron Exceed Those of September 11?
The question of the relative societal effects of the Enron case and the September 11 attacks elicited some of the most heated responses received to date. But where there was heat, there was not necessarily fire—that is, if clear direction and agreement represent fire.
Respondents were nearly evenly divided on the question. However, several arguing for the relative importance of September 11 expressed concern that the question was even asked. Keith Sawyer remarked, "Rubbish... As Bush says, this war has no end in sight, and we have scarcely seen the beginning." Joe Hill's remark was typical of several, when he said that the question is "not only ridiculous, it is offensive." Martin Edie added, "There is simply no comparison between these two, except as an intellectual exercise; one that, in my opinion, is not only insensitive, but not very well considered."
Among the many commenting on the Enron case, nearly all felt that change was warranted but few believed that significant change would come from it.
On the other hand, remarks typical of those arguing for the relative importance of the Enron scandal included: "While terrorism tends to rally folks to patriotism, corruption does just the opposite, and that damage is severe and incalculable...a meltdown of confidence in our system is potentially far more devastating." (Mark Montgomery); "The most striking difference between the Enron scandal and the terrorist attack ... is the realization that the destabilizing effects of the Enron scandal come 100% from within our own society..." (Bob Donlan); and "The most significant difference I see is the response of our government. We should treat the Enron executives as aggressively as we have al Queda" (Mike Donahue).
Among the many commenting on the Enron case, nearly all felt that change was warranted, but few believed that significant change would come from it. The general sense of these comments was that investors, by punishing companies with impossible-to-penetrate and hard-to-understand financial accounting, hold the greatest hope for change. But these very investors were generally characterized as having both short memories and a high level of greed, not very promising characteristics for leaders of change. As Stephen Robbins put it, "History doesn't suggest that much will happen except perhaps a best-selling novelization and a major motion picture starring Richard Gere as Lay."
The sense of most comments received was that while the intent of the perpetrators of the September 11 attacks bore no resemblance to that of those behind the Enron scandal, the damage that each did to levels of trust in our society was substantial. As a result, their implications for us are of comparable magnitude, suggesting that Enron be of more than passing interest. If so, what kinds of responses, especially to the Enron case, are warranted? Who should make them? What do you think?
There are striking parallels between September 11 and the collapse of Enron. Both events involved widespread destruction of trust and its attendant costs. Both have now involved the loss of human life and disruption of the lives of thousands of families. And when the Enron case is finally litigated, we may conclude that both involved criminal behavior.
The comparison of loss of life and criminal activity between the two is so forced as to appear not only insensitive but also positively asinine.
MIT economist Paul Krugman argued recently in The New York Times that "in the years ahead Enron, not September 11, will come to be seen as the greater turning point in U.S. society." Although some might argue the point, a case can be made that events following September 11 have not confirmed our worst fears at the time. Those of us who did not lose loved ones or even acquaintances have learned to live with inconveniences that are somewhat less than truly life-altering. We have even learned how to act differently in the case of further attacks.
There is an old saying that things are never as bad or as good as they at first seem. If you believe that, you've got to believe that some good always accompanies the bad and vice-versa. For at least a period of several months, September 11 has united Americans and others against a common enemy, brought families together, and encouraged many to reappraise their lives.
Ironically, the most immediate outcome from Enron will likely be the enrichment of the very professions that contributed to the mess. First, there will be the obvious windfall of extra legal fees from Enron and related cases. Then it is quite likely that the accounting profession will be enriched permanently through higher auditing and related fees more willingly paid by anxious directors. Insurers too will enjoy increased business and higher rates.
But will we see other positive fallout from Enron? If so, what form will it take? Will investors finally gain access to the kind of data that will provide insights into the quality of corporate profits? Will the work of business-related professions, with or without outside oversight, adhere more closely to relevant codes of ethics? Will directors reassess the seriousness of their roles and act more responsibly? In fact, will we one day look back on Enron as a useful chapter in American business, law, and government? In fact, will Enron one day overshadow the events of September 11 as a turning point in U.S. society? What do you think?