I am not to familiar with Enron, I know the basics, but I was wondering if anyone had a good criqtue of this video. The videos main point is that degegulation caused Enron to exploit California, and basically shows the congressman as the heros of the whole ordeal(if you seen it you know what I mean). One interviewi even says that the free market causes prices to rise. Furthermore they say since Lay and Stilling were “pro free market” it must have been the markets fault. Which I know is bs. Now I know most of this is stupid but if any of you can reinforce me, or correct me, that would be appreciated.
I don’t think you could blame the free market, but you can blame the knowledge of how to exploit a free market. Aside from all their stock manipulations, Enron did a top notch job of controlling energy supply in California. They used their inflated and irrational stock prices to buy suppliers. After owning a lot of supply, it was simply a matter of reducing the available supply, thus creating increased demand and subsequent price.
I notice nobody bothered to explain how deregulating California energy caused price to sky rocket and reduce overall supply resulting in brown outs.
The state blah blah, regulation blah blah, states blah blah, evil blah, states and regulations evil blah,(99% of the article) oh btw there Enron guys were corrupt and that should be looked at. (<1% of the article)
Never once did he actually address how corropt CEO’s and business can contribute to crisis, or how to prevent it.
Cute, but your 'blah blah blah’s are Paul showing exactly how government is to blame for fueling the Enron scandal.
Um, yes he did. At the end. You even included it in your mock summary. He said that Enron and the like should be prosecuted to the full extent of the law, but the whole point was that stopping this type of fraud starts with getting government out of business.
I thought the article was very interesting. I had no idea about the Export-Import Bank.
Wrong. In DiLorenzo’s article, he pointed out the fact that California only deregulated one aspect of electrical power, the selling of it at wholesale price. He also pointed out the various new laws that took effect at the same time. So no, it was not just merely a rant. He provided proof.
You are simply complaining because he did not arrive at the same conclusion you wanted him to. The article was primarily about the alleged cause of deregulation leading to various problems. But back to your issue. First of all, how do you define ‘corruption’ in this context? Is it merely desiring to make a profit, or do you imply actively stealing? Perhaps something else. Remember that the word ‘corruption’ is a loaded term and is relative per person based on their value systems.
But in an indirect way, DiLorenzo was addressing the problem you present. He was pointing out the foolishness of the myth that ever increasing government controls will solve the problems of an already heavily mixed economy. It therefore becomes an implication that its reverse, deregulation, true deregulation, without adding new laws after or giving certain players political favors, solves the associated problems.
I agree with you on the Import-Export bank and his example in India. I was not aware, but need to do some research to verify and speak intelligently about it. (This is where someone jumps in and says I never speak intelligently, then calls me a troll or a dumbass)
I think he presented an argument but not really proof. When California announced exactly what they were going to do and exactly what was going to be deregulated, the Austrians whoms work has been linked for me to ‘read up on’ all predicted lower prices and greater efficency. Why were all those Austrians wrong?
Dont’ answer that. What I find compelling, and fascinating, is that anytime Keynesians get a prediction wrong, you guys (in many cases correctly so) nail them for making justifications for their failures, other than “our prediction sucked”. (Keynsians do this as well on a very large scale but thats another story).
So here we see the great and wonderful Austrians making a prediction about California energy markets, doing the exact same thing. Ummm.. Uh.. IT WAS GOVERNMENTS FAULT! Never once accepting even the remotest possiblity that their theory was wrong.
I find it hypocritical.
Wrong. I was ‘complaining’ (subjective) that he glossed over the highly illegal, unethicial, lying, and coverup techniques that the Lay, Skilling, and the others committeed. He never once addressed in the article about how they attempted and succedded in manipulating supply and monopolistic powers.
If you read that article, you would walk away with the belief it was 100% government regulations that lead to the fiassco and that the Enron buys did something.. not really sure what… wrong and that they should go to jail.
Is that intellecutally honest?
I think there might be a great deal of validity to some of his arguments, and would need further research, but to just stick with the classic absolutist argument “its all governments fault” while overlooking the CONFESSIONS of some Enron employees was intellecutally lazy and dishonest. IMHO.
There are few things to point out. The number one most crucial point is this:
“The real problem with SEC rules is that they give investors a false sense of security, a sense that the government is protecting them from dangerous investments.” Rockwell
The investors and customers of Enron believed that it was impossible for CEO’s and accountants to committ fraud. Otherwise the company would be employing its own audits proper due dilligence. Customers would be weary of any company charging extremely high prices while touting, “We’re in a crisis! Don’t blame us!” while no other areas in the country are experiencing such dilemmas. We have seen the same issues as regards the recent Madoff scandal. The investors believed that the SEC would protect them. The SEC flat out lied when it said it could, because obviously it didn’t. If you watch the movie, you will also see that many employees questioned the practices of Enron as well as potential investors. I remember a part in there where they play a phone recording and the guy says, “Why are you the only company on wall street that can’t provide a balance sheet?” I have worked in the finance industry for many years. Several times a week I get profit and loss statements or similar representations for numbers from potential borrowers who are obviously providing falsified documents or at least over exaggerated numbers. I have to tell these borrowers directly that I cannot use the information provided and that I will need real numbers if we are to consider doing business with them. It is a fact of life, there are lots of people in the business world who try to take advantage of unsuspecting victims. I accept this and sort through the mess with extreme diligence and awareness. If Enron investors did their jobs, they would have known what was amiss. If Enron customers did their job, they would have known what was amiss. If the SEC didn’t lie to people, they wouldn’t have been so lax in their diligence. It would be ridiculous for someone with no experience or knowledge in the lending industry to do what I do on a daily basis. I think it is a good idea for people to know where they are sending their money and why. I don’t invest in the stock market, because I am not an expert in that field. I lend money, because I am an expert in that field. Investing in stocks isn’t for everyone. This is not the gumdrop forest of wealth and prosperity. It is the land of freedom where everyone has the right to succeed and fail, so proceed with caution and be prepared to work hard if you want to better yourself. If someone tells you they can make you rich with very little effort, what fool would believe them?
Rockwell points out about the state of California regarding it’s deregulation, “It also outlawed long-term contracts that allowed power distributors to lock in low prices…” In addition, the state of California helped to create a monopoly for Enron so that they had the ability to manipulate prices, "The state is also famous for using regulation to stop virtually all expansion of electric power supply out of "environmental concerns, ‘guaranteeing an energy crisis.’ " There was a lack of competition in the state due to government regulations. We have submitted ourselves to the same kind of mercantilism and protectionism our ancestors shed blood and tears to escape.
Hey, this got me thinking. Can we successfully sue the govt for the failure of theses regulations? Can regulation become a grevious liabilty that the govt has to account for?
Theoretically they should be, but in practice governments are NEVER held accountable. If you buy a doughnut from a grocery store and it turns out to be stale, you can probably go back to the manager and get a refund. No matter how dissatisfied people are with an administration’s performance, the government never refunds your taxes to maintain consumer good will.
@Ixtellor can you show an example of where the premises of an Austrian argument were true and the conclusion/prediction was false? Because if you could, that would invalidate the argument form, if not undermine deduction and therefore science as a whole.
It seems that your statements rely on the assumptions:
The market was derugulated
The consequences of deregulation were failure in the market
I think I have explained the first assumption is not true, but would like to hear your thoughts. Rockwell’s article points out that in fact the market was not deregulated even though it was claimed that was what was happening. One particular law was eliminated, but a monopoly was created by other regulations such as the prevention of long term contracts which often times ensure low prices and a barrier to entry in the market due to California’s laws which prevent new energy plants from opening related to environmental concerns. So what actually happened was not deregulation as the Austrians talk about. The fact that the government provided Enron with a monopoly on the market pretty much ensured that abuse of that power would occur just as Austrians predicted.
This seems a litle harsh. We should give Ixtellor the benefit of the doubt and assume he posted under the best intentions. I believe he has just made an error in reasoning. I think he really believed that deregulation occurred, though we know it didn’t. It was probably an honest mistake, and we can’t blame him entirely for thinking so. The agencies who removed the law in regards to wholesale prices did say they were deregulating. Since those agencies made the claim and didn’t follow through, they were the ones who spread the original lie and Ixtellor was just repeating it and assuming they were telling the truth. This is the case with many Americans who hear what people are saying and not following through to investigate on whether those claims are true when it comes time for action. Bush made many claims to free markets prior to his innaugeration though in fact he helped bring in more regulation. I’m sure many will reason that since Bush said he was for free markets, then free markets were what his actions were directed towards. We know this is not the case, but it is difficult for those who do not have a thorough understanding of language and economics to comprehend. I prescribe patience and unending education as the cure for this problem. Truth will win out.
If you mean the very basic a priori that it is based upon, then no. It is unfalsifiable. (I can’t disprove man acts to improve satisfaction/ Furthermore I don’t disagree)
If you mean an Austrian theorist/philosopher/economist made a prediction that was wrong. For example hyperinflation. I imagine you, and if you read all the articles they DO, will blame some other form of government coersion.
Your prediction: “X will happen”. When “Y” happens instead, you can point to unforseen government action “Z” which made your prediction untrue, not that the predicition itself was flawed. And since there is always governnment actions…
And if I use Newton’s dynamics to predict the trajectory of a ball I’m about to throw, and it flies somewhere else, I can always point to an unforseen factor like changing wind that made my prediction untrue, not that the prediction itself was flawed. And since there will always be changing winds…
California announces they are going to deregulate PARTS of their energy supply by breaking up their publicly owned utilities and selling them off.
The bill is written in 1995, and is passed in 1996. The legislation is subject to the freedom of information act. Anyone can read it.
Thomas DiLorenzo (The “austrian” expert) writes an article at the end of 1996 that gets published in which he predicts that “Competition will initially save at least $40 billion per year” after which “new technologies will be developed because of the lower energy costs”
Energy costs go up. For a large variety of factors, NOT explained in the “Myth of California Energy” deregulation written once again by… Thomas DiLorenzo. These include: Enron was manipulating supply, California was GROWING thus more people = more demand for energy, a major rupture in a natural gas pipeline that reduced supply, abnormally high temperatures = more air conditioning = more demand for energy, etc etc etc.
So In addition to giving an incomplete answer and glossing over other non-governmental factors, (does the government control the weather?), Thomas DiLorenzo puts almost all the blame on government intervention. The same government intervention that was WRITTEN into the original legislation.The same legislation that Thomas DiLorenzo supposedly read and concluded would result in massive savings.
If the legislation didn’t change, and he read it, and a large number of non-governmental factors contributed to the energy supply in California, why is he putting almost all the blame on government? If he actually read the legislation and saw that several other energy factors and segments were still going to be subject to government monopoly powers… why did he predict savings? Why in 1996 did he predict savings based on the very facts, he is blaming for the collapse today?
The legislation was very clear about what was going to be deregulated. Thomas DiLozano who wrote about the legislation and made predictions about its outcome, presumably read it. Based on the legislation and his own philosophy of markets, he predicited “initial savings of $40 billion”.
My theory is that he Didn’t read the legislation. That he heard them say “deregulate” and made the false assumption it was a totally deregulated market.
Lets assume he did read it, and lets assume the legislation was a total LIE – just fancy language meant to trick us. Where does the busted natural gas pipeline, high temperatures, and Enron manipulating supply enter into his ‘explanation’ of what was going on? I submit, that he purposefully left it out (he did just barely touch on Enron’s crimes) to fit his political and philosophical agenda of “blame government”.
Ixtellor
P.S. Thank you for the defense of my intentions and the appeal to reason.