Entrée Issues

Reading The Smartest Guys in the Room has forced me to acknowledge that our world is not as honest as I once thought. I remember about 2 years ago when I took a tour of the NY Stock Exchange a broker said to me personally, “times have changed… there is just not as much trust anymore.” I liked to believe that he was wrong—however, I figured even if he was right, and people were not trustworthy, the government would force them to maintain some level of truth. The government had full control and operated very effectively. I am increasingly disconcerted about what I hear in the news regarding both organizations and the government. Here are a couple of things frustrating me:


The Relationship between Businesses and the Government

Enron is just one of the biggest organizations to fall due to corruptness. There are countless other organizations out there which are as much of a problem as Enron but just do a better job at hiding their malicious practices. According to The Smartest Guys in the Room, “a new ethos was gradually taking hold in corporate America, according to which anything that wasn’t blatantly illegal was therefore okay—no mater how deceptive the practice might be” (McLean and Elkind 133). One reason business entities can get away with some of their practices is due to their relations with the government. Ken Lay used to lecture on the significance of business-government relations, and cared deeply about “politics and government policy, how government could shape markets” (McLean and Elkind 5). He made it one of his top priorities to build a relationship with key political figures. Lay used to pour tons of money into Bush’s political campaigns in attempt to build political influence. He also gave up to $6 million to Republicans and Democrats. Lay “time and again, would tap his growing network: for a job, for a favor” (McLean and Elkind 5). The way we see Lay was able to use the government to better Enron shows that the government does really have a corrupt side that organizations can also become corrupt from. In fact, organizations can use the government to become almost legally corrupt.

The Similarities I see between the Enron’s Style and the Government’s Style

Recently, Obama proposed a stimulus plan that only he really knew the details of because Congress did not have enough time to read it. The bill was 1,071 pages and Congress had one weekend to discuss it and decide on it. Thus, they voted without having deciphered on the intricate details. According to the MSNBC, “[Obama] invited Democratic and Republican leaders to the White House to hear their ideas on the economy, yet [he] didn’t share the plan’s specifics while they visited” (“President says U.S. could ‘lose a generation of potential’ if action isn’t taken”) It seems that no matter how good a plan is, if it’s putting forth $825 billion, everyone should have read it detail for detail. How the government is rushing a plan this big forces me to question its intentions. It seems like they are taking the Skilling approach to go fast, go big, or go home. Those who knew Skilling said, “Once he got his eye on the prize, price was no object” (McLean and Elkind 107). Obama may have a stimulus plan that the market will react happily to today, but not so happily when they realize the serious long-term repercussions of spending $825 billion. However, by the time that the public can see the true effect of the stimulus package, Obama’s term will be up. Does Obama know what the originators at Enron know:  “by the time it was clear that the deal had gone south, the originator would have gotten his bonus and moved on” (McLean and Elkind 119)?  The stimulus plan may be Obama’s “silver bullet” that he never really needs to be held accountable for. Additionally, do you remember the Skilling theory: “if you hired smart people, it didn’t matter whether they had any experience” (McLean and Elkind 120)? Obama is one of the smartest men in the room for sure, but his experience is not nearly as high as others. Before Obama was elected president, Matt Pearson, the Democratic Party chairman said, “A lot of the people I know say they really like him, but just don’t think it’s his time yet. He could use a little more experience” (“The Big Question about Barack Obama”). Being that we know what happened with Enron, and we know that Obama is less experienced, my only suggestion is maybe we need to take a little more time to read the stimulus plan.

Side Note

I am not overly interested in politics, but I am very interested in The Smartest Guys in the Room. It seems to me like there are a lot of similarities between how the government operates, and how Enron operated. It also seems like businesses relations with the government can be very detrimental. I am just throwing these two points out to the class because that the purpose of blogs. Be gentle with the comments.

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4 Responses

  1. Kelli-

    On long posts, please insert a “read more” break after the first paragraph or so. To do so, there is a button in the text editor. Ask and someone can show you. It frees up space on the main page for more content.

  2. While I do see a lot of similarities between businesses and government there is one line you used that I would have to disagree with.

    “The stimulus plan may be Obama’s “silver bullet” that he never really needs to be held accountable for. ”

    I think that Obama will be help completely accountable for his stimulus plan. He entered the presidency at a really rough time and now everyone is relying on him to fix it. One wrong move and it is sure to blow up in his face. As Americans we have no problem pointing the finger and blaming others on a variety of issues. If Obama’s stimulus plan fails, every single finger in America will be placed on him. While a lot of pressure resides on the president, this amount is multiplied even further for Obama since 1) he entered office when our economy is at its lowest and 2) he is our first president of color. You presented a lot of good points, but I just thought I’d share a different opinion on that idea.

  3. Kelli,

    I appreciate your wide-ranging ideas and thoughts here. Including going back tot he “pre-history” of how Obama was perceived in 2007! Someone once described the Washington press corps as “stenographers with amnesia.”

    I want to double check what you said about the time Congress had to read the stimulus bill. I thought it was longer.

  4. He is still perceived that way. Although he is president, I frequently here people questioning if he has enough experience to be as sucessful as he’d like to be at the job. Here are some blogs from US News and World Reports. It was written on Feb 13, 2009 so its fairly recent history. http://www.usnews.com/blogs/erbe/2009/02/13/gregg-commerce-withdrawal-demonstrates-obama-lack-of-experience.html

    Here is another one from CBS News:
    http://www.cbsnews.com/stories/2009/02/17/usnews/whispers/main4808297.shtml

    I agree that many people believe his experience is his greatest strength. In fact, Obama has said that about himself. However, it is not the traditional experience of others in Washington.

    Also, I think your right that the stimulus plan may blow up in his face if it does not work. As the stimulus plan is designed to work quickly. However, the long term effects of investing this much money into the economy, putting our government into more debt. My question is more: will the positive effects of the stimuls plan come with many serious negative long term effects…like huge debts?

    The stenographers with amnesia thing is quite amusing. I think the Washington press corps have a selective memory for sure.

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