Enron, the Smartest Guys in the Room Essay

Enron was involved in American’s largest corporate bankruptcy. It is a story about people, and in reality it is a tragedy. Enron made their stock sky rocket through unethical means, and in reality this company kept losing money. The primary value operating among the traders was greed, money, and how to make profits under any circumstance. The traders thought that a good trader is a creative trader and the creative trader can find any arbitrage opportunity. Arbitrage opportunity was defined for the trades as the opportunity to make abnormal profits. The traders rocked the prices of electricity over the roof on the consumers’ accounts. Traders discovered that they could create artificial shortages of electrical power so they could push the price of energy higher. With this strategy the west coast traders were able to make almost 2 billion dollars for Enron. The traders never stepped back and asked themselves if what they were doing was ethical; it is in their long term interest; does it help them if they totally defrauded California; does it advanced their goal in nationwide deregulation? Instead, they have pulled from every loop they could have to get the profit from California’s misery. It was released in the court that traders knew they are doing something wrong. The traders that were not comfortable with Enron’s style had only two options. They could have protected themselves from the guild by leaving the company or stay in the game, and blindly follow the orders from the authorities. Those traders would not ask any questions because they were afraid that they would only confirm what they suspected would be true. Therefore, they tried to protect themselves from remorse. We need to ask what the motivation of traders to behave this way was. It was the vision of fat bonuses and Enron’s ability to exploit the darker side of the traders. The traders lost their sense of morality. Once the traders accepted the idea of inhumanity it was acceptable for them to continue with their unethical behavior. The moral compass is our natural feeling that makes people know what is right and wrong and how they should behave. If the working environment does not have moral standards and the individual is not strong enough to step aside, he/she will be drag down and lose their moral compasses. Some people lose their moral compasses and might not feel any responsibility for their actions, because a higher authority approved their action. The traders felt no responsibility on their accounts and accepted their unethical behavior because they had an approval from their CEO Jeffrey Skilling. When I used to work for the banking industry I had an opportunity to see how people can change. The bonus and profit involvement was not at all similar to the ones of the traders from Enron, but the principle was same. Once there was involvement of power from high level management, threat, or reward, people were able to change drastically their behavior. They did not care about clients’ money, property, and well-being because they were threatened of losing their job or blind by the bonuses and career growth visions. I was always curious if they would do the same thing to their family members. How would they behave if there was no client sitting in front of them but their mom or dad? Would they still try to convince them to close some dirty deals by using those lying phrases that they were taught by their supervisors? I could have never understood how it is possible that some people are able to change their face so rapidly without any shame or guilt. I think everybody should treat people the same way how they want to be treaded. I did not care about the pay cut I had to take in my new job as long as I did not need to be involved in such unethical working environment like banking industry. It was my worst working experience ever and in the future I will do everything that I can to avoid working for an industry without moral standards. There is only one circumstance that might cause me to lose my moral compass, and that would be only if somebody would hurt a loved one. John Locke based his theory on moral rights. The people are free and equal and everybody owns their body and labor. The people own anything that was labored by them. However, people agree to form the government to protect their rights, liberty and property that would be otherwise be insecure and unsafe. In Locke’s theory Enron should have not been allowed to be involved in deregulation, because government should be there to protect people’s property and rights. If the government stayed involved in electricity power regulation in California, Enron would not have so easily ripped California of $30 billion dollars. The government should also protect people that invested in Enron, especially employees’ 401k plans. Locke’s natural rights are negative right and for Locke the negative rights do not conflict with positive rights. Those rights imply that the market should be free, which can cause inequality between people. For example large groups of society will stay poor compared to other groups that would grow even richer. Adam Smith’s view of free market derives from utilitarian agreement. The greatest benefits would be produced by free market and private property. The buyers will look for lowest price possible and producers will sell to the buyers anything they want to for the lowest possible price. The market competition would drive the self-interested individuals which would serve society. Enron created fake shortages of the electrical power and since there was not too many suppliers to create market competition that allowed Enron to boost the price of their stock and manipulate the stock market. The criticism of Smith’s argument is the fact that his vision is not accounting for the monopoly companies. Economist Keynes argued Smith’s invisible hand theory. He claimed that without government involvement the demand might not be high enough to absorb the supply. This approach would avoid unemployment and depression. We should not forget that government spending might not cure high unemployment but create inflation. Marx argued that capitalism is concentrating industrial power to the few individuals who organize workers for mass production. This can cause production surplus and economic depression, and replacement of workers by machines can create unemployment. The property should have served for the needs of all society. The social classes were determined by the way how society organized their workers. Enron would never be able to operate under capitalism. The company would be owned by the government and if there would be any discrepancy done it would never come up to the public. State should create mixed economy that would retain private property and market system. The government policies should remedy any deficiencies. The intellectual property system should tend towards Locke’s utilitarian system than Marx’s socialist system. There should be a healthy mix of Locke’s, Marx’s, Smith’s, and Keynes’ philosophy and political views. We should follow Smith and Locke in their low level of government interaction, which would keep strong competition between businesses and benefits for society. Keynes idea would balance the supply-demand equilibrium, unemployment and inflation. And Marx vision would equalize and decrease the gap between social classes and provide support for retirees and disabled society.