Andrew Sullivan, Paul Krugman and Enron

I’m worried I might be getting old. My 30th birthday is fast approaching,

and I’ve recently been reminded of that old canard about how if you’re

not a socialist when you’re young you don’t have a heart, and if you’re

still a socialist when you’re old you don’t have a brain.

I think I’m still as left-wing as I always was, but I have noticed

in myself an increased tolerance – even admiration – for

right-wing pundits of late. A couple of weeks ago I sent out an email

circulating a column

by Mark Steyn; and recently I’ve been finding myself reading

more than once a day.

I think I can explain away the Steyn column by saying that it’s appealingly

contrarian, at least to a lefty like me. We liberals are far more

reluctant to question the motives behind statements from NGOs than

we are to wonder why the average Republican (or even Democrat) politician

is saying something. Jeremy Paxman once said that the question he

always had in the front of his mind when interviewing politicians

was "why is this liar lying to me?"; and somehow I can’t

imagine even him thinking the same kind of thing when interviewing

the head of the UNHCR.

But charity officials are people too, as anybody who’s ever worked

in a non-profit will attest. And when you stop to think about it,

it’s easy to see how UNICEF might exaggerate and spin just as much

as any politician: after all, they know they’re on the side of the

angels. (I’m reminded of that line from William S Burroughs: "If

you’re doing business with a religious sonofabitch, Get It In Writing.")

In general, charities are much less accountable than governments,

or even large corporations. And a lack of accountability inevitably

leads to a dangerous sense of infallibility.

There are pundits I love, all on the left: Kinsley, Krugman, Hitchens.

Whenever I see one of those bylines, I get very excited and drop whatever

I’m doing to read whatever it is they’ve written. Most of the time,

I’m extremely impressed, although Kinsley does sometimes give the

impression that he’s been a little bit short on inspiration that week,

and Krugman is a lot less impressive when he’s writing about the one

subject I know a lot about, Argentina.

Sullivan is in many ways very similar to Kinsley: they share a fondness

for carefully-constructed arguments laced with sarcasm. Most of the

time I disagree with what he’s saying, but his arguments are cogent

enough that at least I can see that he has a respectable point of

view. (Other right-wing

pundits generally just drive me batty with their wrongheadedness.)

He also likes to spend a lot of time commenting on other commentators,

rather than just on the news. Today, for instance, he’s taking a swipe

at Paul Krugman.

Sullivan’s first posting came at 1:15am, just after Krugman’s column

hit the web. Finding nothing to argue with in the article itself,

Sullivan instead lambastes Krugman for his failure to tell us that

he was paid $50,000 by Enron in 1999 to sit on "an advisory panel

that had no function that I was aware of," in Krugman’s own words

elsewhere in the paper. Personally, I would have slapped Krugman for

his rather gratuitous swipe at the Bush Administration at the end

of his column: if the present Administration "doesn’t get it,"

in Krugman’s words, then the Clinton Administration certainly didn’t.

The worst charge that Krugman can find against the present lot is

that the new chairman of the SEC wants auditor independence; that

hardly compares to, say, Al D’Amato’s abolition of Glass-Steagal just

so that Travelers could merge with Citibank.

Fast forward to 12:46pm, and after a good night’s sleep, Sullilvan

is back, pointing out Krugman’s disingenuousness in a column last

year when he said that he did serve on the advisory panel, but wasn’t

really sure why. Now, of course, it’s obvious: the small matter of

$50,000, which Krugman saw no need to disclose at the time. Sullivan

follows this good point up with a piece of disingenuousness of his

own, however: he proposes Krugman "follow many others’ example,"

and donate the $50,000 to charities set up for the benefit of employee-shareholders

whose pension funds have been wiped out. The examples cited, however,

it transpires upon following Sullivan’s link, are all donations to

politicians or political parties: none of them involve remuneration.

By 2:38pm, Sulllivan’s obviously on a roll. He’s now found an article

Krugman wrote in 1999, in which he lauds the free-wheeling entrepeneurial

structure of Enron. Asks Sullivan: "Now tell me if I’m wrong,

but isn’t this structure, which enabled Enron to hide all sorts

of shenanigans, exactly what Krugman is now bemoaning?"

Actually, Andrew, it isn’t. Krugman is bemoaning the shenanigans,

and not the structure which enabled Enron to hide them. After all,

there are many investment banks out there who make quite a lot of

money doing what Enron did: trading energy. The fact that they’re

out there doing that helps to make the energy market more efficient,

and benefits society. What Krugman is bemoaning is the fact that Enron

used its political connections to push through various bits of legislation

designed to give it an advantage over the banks. Enron, uniquely among

energy traders, was pretty much exempt from regulatory oversight.

That‘s what caused the shenanigans, not Enron’s "post-corporate

free-wheeling e-economy."

Just like charities, companies suffer if they’re not held accountable

for their actions. Enron hid lots of nasty balance-sheet nuclear waste

where Wall Street couldn’t see it, and saw its stock soar as a consequence.

Give me "hundreds of casually dressed men and women staring at

computer screens and barking into telephones" any day: just ensure

that I know when they’re making money and when they’re losing it.

For the ironic thing about Enron was that it wan’t the off-balance-sheet

losses which brought it down. Those were large, but still relatively

small in relation to the size of the company as a whole. What caused

the collapse of Enron was that no one would trade with it any more

when the losses were made public. No trading entity can make money

unless it has rock-solid counterparty risk, and when Enron’s secretiveness

came to light, no one had any faith in that any more. It wasn’t a

loss of money which killed Enron, it was a loss of trust.

This entry was posted in Finance, Media. Bookmark the permalink.

2 Responses to Andrew Sullivan, Paul Krugman and Enron

  1. More and more people choose .If you want to buy the cheap jordan shoes,you can search the internet.

Comments are closed.