”People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices.”
These lapidary words, written more than two centuries ago, come from that masterwork, “The Wealth of Nations” by Adam Smith. (You will find the sentence in Book I, Chapter 10.) I was reminded of them “a conspiracy against the public” as I read the news stories about Enron, whose executives dumped their shares while urging their suckered employees to buy them, and Arthur Andersen, the accounting firm that allowed and abetted the Enron fiddle.
The most immediate question for President Bush to face along with Congress is how to help the wronged Enron employees who bought the stock for their retirement years, bought at the urging of the suave and friendly company president. The victims aren’t just ordinary stock junkies who buy and sell speculatively on an hourly basis. They were loyal employees who trusted their employer, their company president, a man trusted also by the president of the United States himself and everybody around him.
At stake here are not only the stolen savings of Enron employees and the future of Social Security but the moral accountability of the capitalist system, of American business and industry, and especially the accounting profession.
To the same passage I quoted in the opening paragraph, Adam Smith added these words:
“It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”
It may be that misguided regulatory statutes rendered such assemblies “necessary” but not even Adam Smith could have accepted such double-dealing “bandit capitalism,” Arnaud de Borchgrave calls it as the Enron scandal has uncovered. And the great Scottish economist would have regarded with dark suspicion Enron’s charitable and communitarian good works, for as he wrote:
“I have never known much good done by those who profess to trade for the public good.”
Everything debate over campaign financing, new accounting rules, civil or criminal actions should be secondary to this overriding question:
What about the Enron employees and their families who have been robbed of their savings by the bucket-shop operations of Kenneth Lay, the recently resigned Enron president? He sold his stock at a profit while advising his employees to buy his stock as its value flamed out in the stratosphere it had once inhabited. Where is the money to repay those lost investments to come from?
The reimbursement is to come from the company executives and the Arthur Andersen accountants who engaged in what is a definable swindle. No law or court-imposed fine is called for to make Enron and Andersen execs cough up the needed funds. If there is any honor left in the Enron and Andersen boardrooms, the repayment funds should be forthcoming from those who, because they were insiders, got out in time. The Enron employees should come before the Enron and Andersen defense lawyers collect their millions and millions in legal fees.
And guilt-ridden members of Congress, who are returning to the bankrupted Enron past campaign contributions, should instead return the money to an Enron employees fund rather than having it go to defense lawyers.
True, it will take some complicated accounting examinations to determine how much is needed to replenish the retirement accounts of the mulcted Enron employees. I am sure if he were around in more than spirit Adam Smith would agree that the accountants should have no connection with the Arthur Andersen firm.