Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
Keep CounterPunch ad free. Support our annual fund drive today!

There’s No Place Like CounterPunch

There's no place like CounterPunch, it's just that simple. And as the radical space within the "alternative media"(whatever that means) landscape continues to shrink, sanctuaries such as CounterPunch become all the more crucial for our political, intellectual, and moral survival. Add to that the fact that CounterPunch won't inundate you with ads and corporate propaganda. So it should be clear why CounterPunch needs your support: so it can keep doing what it's been doing for nearly 25 years. As CP Editor, Jeffrey St. Clair, succinctly explained, "We lure you in, and then punch you in the kidneys." Pleasant and true though that may be, the hard-working CP staff is more than just a few grunts greasing the gears of the status quo.

So come on, be a pal, make a tax deductible donation to CounterPunch today to support our annual fund drive, if you have already donated we thank you! If you haven't, do it because you want to. Do it because you know what CounterPunch is worth. Do it because CounterPunch needs you. Every dollar is tax-deductible. (PayPal accepted)

Thank you,
Eric Draitser

From Teapot Dome to Enron

by T.W. Croft

The Enron debacle has major implications for the labor-capital movement. Not only did Enron’s collapse undermine the retirement security of all workers whose pension funds held Enron stock, the company’s melt-down revealed serious flaws in our nation’s financial system which threaten the security of the nation’s retirement system. Enron has already cost labor’s pensions billions of dollars in assets. Its collapse reminds us that there is truly something broken in our economic system.

Once Upon an Economy…”Captains of industry were less interested in economic efficiency than they were in extracting gains by transferring ownership via the medium of saleable rights to property (as) managers sought to enhance intangible assets rather than produce goods…It seemed obvious that production and output were entirely dependent on the pecuniary needs of the financiers…(taking) close note of interlocking directorates, holding companies, and watered stock. Their price policies…were geared to the maximization of profit through the enforcement of scarcity. Supply and demand could not be the genuine foci of attention in economics, so long as it was possible for business to resort to a ‘conscientious withdrawal of efficiency.’

“…Moreover, credit was pyramided, one form piled on the other, particularly through capitalized prospective earning power. The process became quite complex, so that the distinction between credit and the underlying tangible goods was obscured. Soon perceptible discrepancies developed between business values and the equipment they were supposed to represent. As the economy entered upon its anticipated state of euphoria, the growth of intangibles soon out-sped the expansion in real goods. A credit inflation ensued, which eventually turned into forced liquidation of assets. Creditors feared that the discrepancy between business and real values had gone too far, and the demand for debt repayment initiated the economy’s downward movement.”

A scathing review of the Enron Scandal? Off by 75-80 years. These paraphrased words were the indictments of the Teapot Dome era, the notorious oil scandal of the Warren G. Harding Presidency over three-quarters of a century ago, wherein secret insider oil deals allowed illegal drilling of the Naval Oil Reserves. These words were an indictment of “commercial sabotage”, the process whereby businessmen used the “arcane skills of bargaining, effrontery, salesmanship and make-believe…to make gains at the cost of the community”.

These were the ideas of a sociologist named Thorsten B. Veblen (1857-1929), the son of an immigrant Norwegian farmer in Wisconsin, who went on to teach at the University of Chicago. He was the author of The Theory of the Leisure Class, coined the term “conspicuous waste”, and pre-figured the conditions that led to crash of 1929. He could have obviously been talking about Enron.

The End-Runs…

The white-collar destruction of one of the largest corporations in America, leading to the largest bankruptcy on record, is but the icing on the bubble that was the 1990’s New Economy. “Commercial sabotage” seems an apt description of the Enron legacy, after thousands of workers and millions of investors and energy consumers have had their economic security disrupted and in some cases destroyed. Will the recent official suicide be the last? Probably not.

The End-Run Corporation is a distressing story of demented de-regulation, politicians on retainer, concocted off-shore shell corporations, duped investors, an exploited energy crisis, and obscene short-term profits. According to recent press investigations, insiders bailed out with illicit gains, cooking the books and robbing workers’ 401-k-plans. Now that Congress and a few johnny-come lately media watchdogs are investigating the collapse, it might be a good thing, as Martha Stewart says, to summarize the innumerable end-runs around acceptable standards of corporate governance, fiduciary responsibility and accountability, as the allegations mount:

End-runs around management fiduciary responsibility as 29 executives received $1.1 billion by selling 17.3 million shares prior to the decline of stock prices early last year (as $30 billion of shareholder value evaporated). End-runs around pension system fiduciary responsibility and integrity as workers’ savings were locked down while managers sold their shares, leading to the loss of $1.2 billion dollars in life savings at the same time that 4,000 Enron employees were losing their jobs. End-runs around the fiduciary responsibility laws of ERISA and rules protecting retirement security as billions of dollars of pension funds were lost in the melt-down, as investors relied on inflated stock prices.

End-runs around auditor accountability as Arthur Anderson destroyed thousands of documents, while engaging in separate consulting agreements. It is the “third strike” against Anderson (implicated in the Waste Management and Al Chainsaw Dunlap’s Sunbeam scandals). End-runs around accountability to democracy as the company ripped off billions of dollars from California energy consumers. Deregulation allowed the power industry to overcharge as much as $71 billion from California. The California energy crisis was orchestrated by a power industry freed from price regulation — costing $2,200 for every Californian. End-runs around political independence as Enron executives held secret meetings on public energy policies of the American people. Were there plans for Teapot Dome 2? End-runs around corporate board governance, independence and responsibility as former regulators were seated on the board of directors, and looked the other way as up to $1 billion in profits were overstated.

The Crooked E…The public
needs to avoid future Enrons:

Pension laws must regulate all workers’ savings, putting limits on investments of workers’ 401(k) plans in terms of their employers. Corporate board governance laws must guarantee board independence and oversight. Energy providers need to remain regulated, with proper public oversight. Auditers need to be reigned in and regulated by public authority, not peer review. Campaign finance reform must be enacted to minimize white-collar influence-peddling. The attempts to de-regulate and privatize social security and set up similar end-runs around the public trust must be halted.

E.J. Dionne Jr. argued in his syndicated column of February 19, 2002 that Enron highlights a new kind of conflict in American capitalism- the conflict between insiders and outsiders. Both shareholders and workers suffered from the short-term mentality that led to Enron’s collapse, and worker-shareholders suffered most of all. Dionne suggests that this fact could lead to a new kind of politics based on a worker-shareholder alliance, which is the kind of politics that the labor capital movement is trying to advance. As David Dreyer, a former Treasury Department official, put it, “It used to be said that because so many people had 401(k)s, you couldn’t do class politics anymore. Now, with Enron, because so many people have 401(k)s, you can do class politics.”

Time to Ask Questions…A large number of workers and their families in Houston will never fully recover from the Enron implosion. The next time an institution appears to be destroying a workplace, not to mention the public trust of the nation, maybe its wise to ask why.

The Teapot Dome crooks went to prison. The same fate should face the smooth-talking insiders at Enron–the kind of people that Veblen called “predatory business tycoons”–along with some of their board, legal and auditing accomplices.

T.W. Croft is the Director of the Heartland Labor Capital Network

(C) 2002 T.W. Croft










More articles by:

2016 Fund Drive
Smart. Fierce. Uncompromised. Support CounterPunch Now!

  • cp-store
  • donate paypal

CounterPunch Magazine


October 25, 2016
David Swanson
Halloween Is Coming, Vladimir Putin Isn’t
Hiroyuki Hamada
Fear Laundering: an Elaborate Psychological Diversion and Bid for Power
Priti Gulati Cox
President Obama: Before the Empire Falls, Free Leonard Peltier and Mumia Abu-Jamal
Kathy Deacon
Plus ça Change: Regime Change 1917-1920
Robin Goodman
Appetite for Destruction: America’s War Against Itself
Richard Moser
On Power, Privilege, and Passage: a Letter to My Nephew
Rev. William Alberts
The Epicenter of the Moral Universe is Our Common Humanity, Not Religion
Dan Bacher
Inspector General says Reclamation Wasted $32.2 Million on Klamath irrigators
David Mattson
A Recipe for Killing: the “Trust Us” Argument of State Grizzly Bear Managers
Derek Royden
The Tragedy in Yemen
Ralph Nader
Breaking Through Power: It’s Easier Than We Think
Norman Pollack
Centrist Fascism: Lurching Forward
Guillermo R. Gil
Cell to Cell Communication: On How to Become Governor of Puerto Rico
Mateo Pimentel
You, Me, and the Trolley Make Three
Cathy Breen
“Today Is One of the Heaviest Days of My Life”
October 24, 2016
John Steppling
The Unwoke: Sleepwalking into the Nightmare
Oscar Ortega
Clinton’s Troubling Silence on the Dakota Access Pipeline
Patrick Cockburn
Aleppo vs. Mosul: Media Biases
John Grant
Humanizing Our Militarized Border
Franklin Lamb
US-led Sanctions Targeting Syria Risk Adjudication as War Crimes
Paul Bentley
There Must Be Some Way Out of Here: the Silence of Dylan
Norman Pollack
Militarism: The Elephant in the Room
Patrick Bosold
Dakota Access Oil Pipeline: Invite CEO to Lunch, Go to Jail
Paul Craig Roberts
Was Russia’s Hesitation in Syria a Strategic Mistake?
David Swanson
Of All the Opinions I’ve Heard on Syria
Weekend Edition
October 21, 2016
Friday - Sunday
John Wight
Hillary Clinton and the Brutal Murder of Gaddafi
Diana Johnstone
Hillary Clinton’s Strategic Ambition in a Nutshell
Jeffrey St. Clair
Roaming Charges: Trump’s Naked and Hillary’s Dead
John W. Whitehead
American Psycho: Sex, Lies and Politics Add Up to a Terrifying Election Season
Stephen Cooper
Hell on Earth in Alabama: Inside Holman Prison
Patrick Cockburn
13 Years of War: Mosul’s Frightening and Uncertain Future
Rob Urie
Name the Dangerous Candidate
Pepe Escobar
The Aleppo / Mosul Riddle
David Rosen
The War on Drugs is a Racket
Sami Siegelbaum
Once More, the Value of the Humanities
Cathy Breen
“Today Is One of the Heaviest Days of My Life”
Neve Gordon
Israel’s Boycott Hypocrisy
Mark Hand
Of Pipelines and Protest Pens: When the Press Loses Its Shield
Victor Wallis
On the Stealing of U.S. Elections
Michael Hudson
The Return of the Repressed Critique of Rentiers: Veblen in the 21st century Rentier Capitalism
Brian Cloughley
Drumbeats of Anti-Russia Confrontation From Washington to London
Howard Lisnoff
Still Licking Our Wounds and Hoping for Change
Brian Gruber
Iraq: There Is No State
Peter Lee
Trump: We Wish the Problem Was Fascism
Stanley L. Cohen
Equality and Justice for All, It Seems, But Palestinians