Now Playing at Reason.tv: Obama's Enron Problem

 

Capitalism at Work author and Enron insider Robert L. Bradley, Jr. on why Obama's energy plan is as phony as the defunct energy giant's accounting scheme; how Texas Gov. George W. Bush abetted Enron's rise; how Ayn Rand created her own movement meltdown; and much more.

Approximately 10 minutes; interview by Michael C. Moynihan; shot and edited by Dan Hayes.

Comments

[shrike]

"Business (Enron) shapes government for its own benefit - like defense and ADM did" and "Bush enabled Enron" - Bradley.

This guy has 20/20 vision in hindsight which is no great feat.

But he is an oil first guy. (hey, I just bought a chunk of SGY today) - but he is out of step with energy modernity.

Not impressed at all.

[Mo]

Tomorrow Reason.tv interview Fuld on Obama's financial strategy.

[adrian]

energy modernity? wtf is that

cheapest, most efficient fuel should be used. the market will figure out what that is.

[adrian]

why is the book 40 bones. and how is it out of stock with no reviews..

[joshua corning]

But he is an oil first guy.

One day we will find the mythical "ONE" who is absolutely informed about energy yet have no connections to it....and he will come forth and choose our shining path!!

[twv]

Comparing Enron to NBI is weird. Usually, when one makes comparisons, one takes an event and compares it to a better known event, not a more obscure one.

Still, I suppose if you are an Objectivist or libertarian, the NBI breakup is better known to you than the Enron debacle.

I wonder what Mr. Bradley made of Enron's weird accounting techniques (a) before the crash and (b) now. The first time I heard of the company's novel technique, my flag flew up: "fraud." Enron engaged in inherently fraudulent accounting practices. The fact that the US government regulators signed off on them spoke volumes about federal regulators (not worth much, that crowd). But how do anti-fraud libertarians deal with a company that used fraudulent techniques as basic operating procedure?

And if a company engages in accounting techniques that deliberately obfuscate assets and liabilities, is any crack-down on such practice before the company implodes "regulation"?

[Paul]

twv:

But how do anti-fraud libertarians deal with a company that used fraudulent techniques as basic operating procedure?

Help me out here. As opposed to pro-fraud libertarians?

I'm going to assume that you haven't really thought out your question.

Perhaps you meant, how do libertarians who are not averse to any regulation deal with an Enron.

Well, you kind of answered your own question. Enron was committing fraud. Therefore, they were breaking existing rules. Maybe you're asking a question about oversight?

The question they usually asked by the pro-regulation left is, how do you deal with a company that dupes the public where no regulations exist, therefore what they do can't be legally considered fraud?

One could argue we have that situation in our economy now: banks that weren't breaking any laws, but were leveraging themselves many times over their reserves on questionable investments.

The answer there lies in "moral hazard".

We don't have an unregulated market. We have a heavily regulated market. Our market is flood-walled with regulations. Therefore, we are blind to rising waters and pay no attention to them until they're dangerously high. IN other words, we're insulated from early market signals which would normally flag a questionable situation.

[joshua corning]

PIRATES!!!

[SIV]

Well Obama hasn't been advised by Enron's Paul Krugman yet has he?

[P]

I have to say, I'm not all that impressed by this guy. He makes a lot of really broad statements without addressing the counter-points.

I'll put it this way, it's not one of the many Reason.tv vids that I would feel really comfortable sharing with my liberal friends.

And another thing, so what if Obama's energy plan is the same as Enron's? Enron got in trouble for bad accounting not bad energy solutions. (or maybe I missed something.) It seems like he's trying to connect Obama to Enron, as if to say there is something intrinsically wrong with there being a parallel. It's like he's using "Enron" as a bad word. I agree with him, but it has nothing to do with Enron specifically, it has to do with excessive intervention.

Who is saying that Enron didn't take government subsidies/handouts? We all know this.

[.]

zzzzzzzzzzzz

[RJ]

Paul: I think maybe twv was thinking of this question instead:

How do libertarians who are averse to any regulation deal with an Enron?

[Kendall]

In case you missed it, the reason Enron skyrocketed out of control were regulations forcing companies to buy renewable energy. Libertarians would be against such regulations in the first place, not allowing government mandates to funnel money into a small set of companies that then grow abnormally large - too large to fail.

That's the same thing he's saying might happen with a similar Obama mandate for certain amounts of renewable energy to be used...

The cost of fuel is ALREADY pushing people to renewable sources. Encourage research in that area to make the use of renewable energy even MORE appealing, not use approaches that are supposed to punish those use traditional sources of fuel and hoping renewable energy will work out.

To that end, McCain's idea for "X-Prize" style competitions around things like battery technologies were a great idea. Let private enterprise fund and compete to develop better technologies, leveraged by a relatively small amount of government funds.

[Don Meaker]

Countries are not too large to fail. Neither are companies.

[P]

Kendall, you should check out Reasons piece on "McCain's big cash prize."

[twv]

RJ was on my track:

Paul: I think maybe twv was thinking of this question instead:

How do libertarians who are averse to any regulation deal with an Enron?

I've been talking with and debating with libertarians for years, and I do not think very many of them understand how fraud works. I have met few who have profound things to say about Enron. Most place the blame on some energy market regs. But they almost to a man ignore the big fraud at the heart of their accounting system. (A system, amusingly, approved by regulators!)But this string is already old, so I won't elaborate here.