A constantly repeated cautionary tale is of the Enron Scandal that happened over a decade ago. Looking through my course textbooks and listening to my professors’ examples, Enron comes up again and again. University students tend to absorb information without really understanding it; I was guilty of accepting the Enron example, chalking it up to bad accounting policies and fraud. I know this example is beaten to death, but it just recently hit me how horrible the situation was. During the last semester break, I came across a documentary about the Enron scandal. I was stunned after realized how many lives the scandal destroyed.
There are many aspects of the documentary that are incredibly disturbing.
The 401k “Fidelity Investment”
The whole ideology behind the 401ks are the encourage an employee to stay in a company for a lengthy period of time, reducing turnover costs and establishing lifelong employees. The 401k is a benefit that I am sure many employees were ecstatic about. Are you ____ kidding me? “Fidelity”? There is one extremely twisted dimension of your psyche to screw over people who invest their hard earned money into your company (shareholders), and there is an entire level above that in screwing your OWN EMPLOYEES when they invest in their future through your company in the form of pensions. Enron effectively screwed their own employees over through stock options. There was that one clip that repeated a few times about a woman laughing at the idea that the 401k was a bad investment. I can imagine my parents buying into a stock like Enron, a “guaranteed” winner and suddenly losing all their money. It baffles me to think about how this affected households around the world that invested in Enron. There was no warning for any of the victims.
The Rolling Blackouts in California
Enron created their own price market for energy by artificially creating a energy crisis in California in 2000-2001. They would literally call up an generating plant and tell them to shut down for a period of time to reduce supply of energy and drive prices up. On the surface, this seems like an economical strategy to force consumers to spend more and increase Enron’s profits. California’s ability to produce adequate electricity for itself far exceeded the demand. I can’t help but assume that the ones in charge of this idea had some sort of God complex. The gall it must take a person to play around with a state’s power supply is unfathomable to me. Think about the hospitals that lost power and the deaths that may have caused. Think about the street lights going off, causing accidents. Think about the effect on every other business in California. Think about the heat exhaustion because the A/C no longer worked. Think of the suffering.
The Conversations between Traders (I don’t know if they are true or just representations)
It’s like you gave unlimited power to a six-year old bully and then listened to his thoughts. The way they talk about their unethical acts is appalling.
A huge component of the scandal was the accounting methods that enabled Enron to cheat their way to wealth, but there is also the aspect of hubris and greed. Given the opportunity, I think many people would sacrifice some of their morals for wealth. Our society attributes success with money and pressure is put upon people to succeed. I don’t think it’s wrong to want to attain wealth, but wealth isn’t all there is to life.