Monday, May 10, 2004

Enron Goes To War

In this week's column, I was limited by both time and space so I couldn't make all of the potential Iraq-Enron analogies. One that got cut was that in addition to treating Iraqi prisoners as off-balance-sheet entities, the Bush administration's defenders, by trying to justify the prisoner treatment by comparing it to far worse abuses under Saddam Hussein, are engaged in what can only be described as "mark-to-market morality."

The newspaper version of the column is available here. The Digby blog entry first comparing the Bush administration to Enron is from April 18, 2003, and it's far too long but is obviously seminal to my column. You can read about The Smartest Guys in the Room here.

East Valley Tribune, May 9, 2004

The four phases of Bush’s war in Iraq:

One: It’s all about the imminent threat of Iraq’s terrifying weapons of mass destruction.

Two: It’s all about liberating Iraqis from a brutal dictatorship which engaged in torture and prisoner abuse.

Three: It’s all Donald Rumsfeld’s fault.

Four: America -- We’re really not as bad as Saddam was!

The Bush administration is managing its war as a business school case study. Unfortunately, the company is Enron. It’s “Kenny Boy Goes to War.”

(Google reveals that Digby at Hullabaloo compared the administration to Enron back in April, 2003, way before the peace started turning out so well.)

Consider the parallels. Enron’s CEO, Ken Lay, cast himself as a national and world leader. As his company’s stock rose, he was featured as an avatar of the New Economy -- the man who, with his team of brilliant, no-nonsense dealmakers, would create an entirely new economic world order, where really smart people would do really important things with Big Ideas and made-up markets that would be far more important (and profitable) than such humdrum activities as finding and delivering natural gas.

Lay did the business equivalent of landing on a carrier to give a speech in front of a “Mission Accomplished” banner. He stayed overnight at the White House (during the first Bush administration), and even got one of those cute nicknames from the current President Bush, “Kenny Boy.”

Lay appeared on the covers of business magazines -- to their later embarrassment, as Business Week had to airbrush him out of a picture of leading executives attending a Business Week conference at some post resort.

But as authors Bethany McLean and Peter Elkind describe Lay in The Smartest Guys in the Room, Lay was “the genial but clueless CEO who reveled in the trappings of his office but ducked the responsibilities.” Just like George W. Bush.

In truth, Lay was a bad CEO, and Enron a terrible company. Lay was in charge, but when Enron collapsed he claimed not to know what was really happening. Lay thought that delegating a task was the same as completing a task -- and that his good intentions mattered far more than his sorry results. Just like George W. Bush.

Lay refused to make decisions or to resolve disputes among his subordinates. Jeffrey Skilling and Rebecca Mark let their personal rivalries hurt the company -- just like George W. Bush, as the feud between Rumsfeld and Colin Powell and their teams is interfering with what the United States is trying to accomplish in Iraq. (Rumsfeld is Skilling; both were hailed as brilliant and dynamic leaders, but now they’re out-of-the-loop fall guys. Anything to protect the clueless CEO!)

Enron refused to let traditional accounting rules get in the way of its supposedly new “business model.” It manipulated mark-to-market accounting and used off-balance-sheet entities to hide the economic realities. Just like the Bush administration, which classifies prisoners in Iraq, Cuba, and military facilities here as off-balance-sheet entities, not entitled to protections offered either criminals or prisoners of war.

The Coalition Provisional Authority in Iraq is another off-balance-sheet entity, as the Bush administration claims that it is, and isn’t, a federal agency, whichever allows it to avoid audit and oversight at that particular moment.

Bush is Enron, except for one truly vital difference. When Enron’s misleading accounting and self-righteous belief that they were all just too smart and too good for such mere trifles as rules finally caused the company’s collapse, lots of people lost money -- but only money. The Bush administration’s misleading accounting and disregard of rules has cost 767 Americans their lives.

So far.

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