A Heartless Son-in-Law
Why did the US Government Let the Energy Giant Enron Go Bankrupt?
by Rainer Trampert
[This article is translated abridged from the German in: Konkret 3/2002.]
Enron with natural gas and electricity was the seventh-largest US corporation in only 15 years. Then it went bankrupt although it had many friends in the government. How was this possible? The boss, Kenneth Lay, was the greatest sponsor of George W. Bush. The president called him on his birthday "Kenny-boy"... Half of the members in the House of representatives and three-quarters of the senators cashed Enron gifts.
"Crony capitalism" is the key word. Crony is a buddy. Bush comes from the oil branch and his administration is actually full of buddies. He brought Robert Zoellick (trade commissioner), Thomas White (Secretary of the Army) and Lawrence Lindsey, his economic advisor, from Enron. The Vice-President was manager of Chevron-Texaco, the second largest energy corporation of the world and owns a pipeline construction firm with "Haliburton". Security advisor Rice was on the board of directors of Chevron. The largest tanker of the corporation was launched in her name. Neither of the two was expected to save the rivals. Why didn't the friends of Enron lend a hand?
When Enron tottered, the top personnel sold their firm's shares on the quiet and asked their friends in government for help. However there was suddenly no help any more. When Clifford Baxter, the vice-president of Enron, was found dead with a shot in the head in his Mercedes, Bush said: "I am speechless. Last summer my own mother-in-law bought Enron shares for $8000 and now they are worthless". Lindsey spoke calmly of the "tribute of American capitalism" and Secretary of Commerce O'Neill gave a dismissive gesture. "The genius in capitalism is that people make good or bad decisions and must pay for them." - One more and the other less, the top executives gained over a billion dollars by selling their shares and the employees lost their old age pensions.
"Crony capitalism" has had better times. Bill Clinton was ready to start a trade war for his sponsor "Chiquita Bananas". Jimmy Carter helped out Lee A. Iacocca with $4 billion. Iacocca changed from ford to Chrysler. He said: "With Ford when `the business ran well', he `favored the Republicans' but `since I have come to Chrysler, I tend more to the Democrats'. Would the democrats have been the better buddies of capital? No, Enron would also have collapsed with them.
The myth is taken away from "crony capitalism". Changes from the economy to politics occur more often in the US than in Germany. For example, Robert McNamara, the president of Ford corporation, changed to Secretary of Defense or war minister in the Vietnam war. Corporations and the state form a unity. The ruling class is divided into one division that increases capital and another that makes policy.
Why was Enron dropped? The ship sprang a leak at the wrong time. The president wages war and his hero role cannot be damaged by suspicion of mafia actions. Perhaps the government also understands something about the economy and knows a recession exists for creative destruction (Schumpeter). A state that invests the money from profitable sectors into weak sectors extends the degenerate part of the economy and contributes to the prolongation or deepening of the crisis. Instead of taking a deficit with Enron, one prefers to leave the cadaver to enterprises that have proven profitable. This increases the total profit. On first view, it seems illogical that the US government gets the state in debt again to stock up the weapons arsenal. However the production of weapons only appears as a false keynesianism from a future-oriented perspective.
Ruin is rational for crisis purification. The German model is not different from the American model in essence. However the national pathos sometimes superimposes economic Darwinism...
The symbiosis of readiness for sacrifice and cult of the leader accelerates the devaluation of value from the social into the profit sector