ENRON TAPES – What people don’t get about this case: it isn’t about Enron alone.

The Enron Tapes and the Snohomish vs. Enron hearing aren’t just about a few potty mouthed “bad apples” at Enron engaging in opportunistic exploitation of regulatory loopholes (as Enron’s PR people would like you to believe). They highlight a fundamental problem of our system of governance: the balance of power between corporations and the average human citizen is way out of whack. This is a point that those of us on our side of the issue would be well served to bring to the fore.

Enron lobbied our legislators and regulatory agencies with the conscious and deliberate intent of creating a non-transparent marketplace full of inefficiencies that they could then exploit (see Dr. Carl Pechman’s testimony, quoted in previous posts). AND OUR LEGISLATORS AND REGULATORS LET THEM GET AWAY WITH IT… or rather, they did not intervene, because they saw nothing unusual in the process as it happened. This doesn’t always result in disaster (apparently New York state managed the deregulation process better), but it happens way too often.

The technical term for this is “regulatory capture”. (1) This term was created approximately thirty years ago by Richard Posner, so it is not a new problem – just an ever more pressing one. The theory is ultimately very logical, and meshes with that of another political truism: those with the most concentrated interest in a particular aspect of governmental policy will have the most influence over it… and since, in many cases, the entities with the greatest interest are those being regulated, and have the most resources to devote to influencing the regulators and legislators, the result is pretty predictable — and especially dangerous, due to the amoral imperatives fostered by corporation based capitalism, as I’ll discuss later on.

And it doesn’t matter which party is running things. This particular instance was a bi-partisan effort: it happened under a Republican Governor and was initiated by a Democratic representative in a legislature throughly controlled by a strong Democratic Party majority (AB1890 passed the State Legislature unanimously, 77-0 in the Assembly and 39-0 in the Senate), and it blew up under a Democratic governor and a Democratic, then Republican President.

This goes beyond partisan ideology – what we are talking about here is the fact that elements of corporate America have systematically subverted our government’s regulatory apparatus for private gain. This happens over and over and over again, regardless of which party is in power, at any level. In this particular instance, it just happened to go sour in a very big, and very public way.

The movie “The Corporation”, subject of a feature article in Metro Santa Cruz (an alternative weekly newspaper published in my home town) posits that this is part and parcel of the behavior fostered in those participating in the economic structures of corporation based capitalism. I haven’t seen the actual movie yet, but it is clear from the article that the movie’s creators believe that until we change from a system based on the corporation as the basic operational economic unit, a system which makes amoral behavior not only legal, but essentially mandates it, all efforts to remediate the problems our society faces will be futile.

The fact that the motivations of those influencing our government and regulatory processes are essentially amoral would explain a lot, eh? It would also explain why, under this particular administration, so heavy with corporate types, amoral behavior has become par for the course.

I’ll end this by re-emphasizing my core point: the Enron tapes are about more than Enron, they are about the fundamentally corrupted nature of our system of economic and social governance, as exemplified by Enron‘s efforts to influence the regulatory structure it would in turn operate within; our side needs to bring this aspect to the fore of the discussion, and not let itself be distracted by the more sensationalistic aspects of the case, which are essentially trivial in nature, and not particularly relevatory (which is one reason why I think that the phenomenon of these tapes simply hasn’t produced the political and social firestorm one might have expected, given their inflammatory nature).

1. This is an economic term describing a situation where one operator (or group of operators) in the market uses its influence or resources to extract a regulatory decision, or lack of decision, for their own benefit rather than the benefit of society as a whole.

It is associated with patterns of behaviour on the part of a regulatory body in one, or a combination, of the following situations:

* the regulatory body is tending to further producer interests over consumer interests.

* the regulatory body has become overly protective towards the regulated entities.

* the regulatory body is tending to adopt objectives that are very close to those of the entities it is supposed to regulate.

(Definition source: www.betterregulation.ie/ getFile.asp?FC_ID=18&docID=48)

P.S. As a Green, I have to point out that Ralph Nader and the Green Party have made untrammeled corporate power a major theme from day one. In a sense, it can be said that the Democratic Party’s systematic neglect of this issue has created the political breathing space for Naderism and the Green Party to emerge as an visible force in American politics, as it is clear from polls and surveys that their strongest support comes from those folks who see this as a core issue. In my opinion, John Kerry and the Democratic Party (as well as the nation as a whole) would be much better off if they attempted to secure their “left flank” by addressing this issue directly, rather than continuing the obviously futile (and rather annoying) tactics they’ve used to date.

Thomas Leavitt