The Smartest Guys in the Room
When I was growing up in the fifties and sixties, preachers and teachers and professors and, perhaps, medical doctors were the most influential voices in our CRC sub-culture. Businesspeople are the dominating influence in our culture these days. If someone is successful in business—which usually means “makes lots of money”—we have a tendency to genuflect as he passes by. The conventional wisdom of our time is that business people, bankers and lawyers are the smartest guys in the room.
Of course, this tendency to venerate successful business people has been a major characteristic of the larger culture for a much longer time--which leads me into my topic for today, the film documentary, Enron: The Smartest Guys in the Room. I had seen the film a couple of years ago, but seeing it now, in the context of the international economic meltdown, it spoke to me even more powerfully, and it prompted some observations about whose influence should dominate in our culture.
The Smartest Guys in the Room traces step by step the rise and fall of the Enron Corporation, showing with absolute clarity the intention of Ken Lay, president of Enron, and Jeffery Skillings, CEO, to do almost anything, no matter the morality of it, to make money for themselves. And for quite a few years, they succeeded.
They succeeded by the skillful use of political influence, by bribing their accounting firm, by reporting profits they did not make but only hoped to make, and by taking advantage of loopholes in energy deregulation legislation.
But for me, the most astounding trick they played involved the stock analysts of the major banks and investment corporations in this country. By playing upon their susceptibility and greed, Enron leaders persuaded these analysts to buy stock from Enron and the bogus companies it had created even though there was no evidence of real profits. One critic, citing Lenin, calls these analysts Enron’s “useful idiots.”
This aspect of the Enron story, one small part of a vast and complex web of shenanigans, is what I want to look at a bit more closely. Stock analysts from virtually every major bank and investment firm fell under the spell of Enron’s courtship. Here’s a list of just a few: Soloman Smith Barney, JP Morgan/ Chase, Citibank, Deutchebank, Morgan Stanley, Citigroup, CSFB, and Merrill Lynch. The analysts dealing with Enron must have been senior members of their firms, and they had to have gotten permission from their superiors to buy the Enron stock under highly suspicious circumstances. In other words, a whole bunch of really smart businessmen bought into the Enron charade. Unfortunately, they weren’t as smart as the smartest guys in the room, the leaders of Enron who conned them.
These leaders, Kenneth Lay, Jeffery Skillings, and the others, were smart guys. They pulled off their smoke and mirrors game for 16 years. They had their employees and most of Wall Street eating out of their hands. In the end, of course, they weren’t smart enough. Skillings sits in jail; Lay died before he got to prison; another committed suicide. And none of them was smart enough, apparently, to realize that a vast complicated house of cards like the Enron house, could not withstand the winds of time and circumstance for very long before it would collapse.
What does the Enron story have to say to us today? Perhaps this: The smart business people from Merrill Lynch and Citibank and Morgan Stanley and all the rest of those banks learned from their mistakes. And so, after 2001 they behaved more sanely, invested more wisely, were less greedy and insisted on more regulation to avoid the losses like those sustained with Enron.
Wrong!! They learned nothing and nothing really changed. The smart business guys, the brokers and analysts went right on making the same stupid kinds of investments they had made with Enron. But on a much grander scale. The housing bubble makes Enron look like a fleabite. Bernie Madoff’s ponzi scheme makes Jeffery Skillings look like a piker.
Much more recently, when President Obama and the press criticized Wall Street executives for giving themselves $50 billion in bonuses in 2008, several of these executives justified the bonuses, saying they have to pay them to keep their smartest people from taking other jobs. Jon Stewart gave the only sensible response one could give to this line of reasoning: “You don’t have any smart people.”
Where did we ever get the idea that the guys running our businesses and corporations are the smartest guys in town? And why, in the last twenty years, has a business model taken over many of our churches and schools and charitable institutions? Because of the belief that business people know how to do things right.
Let some philosophy or education professor question the transformation of professors into workers, of students into consumers, of education into a commodity, in short, of a college into a business, and he is likely to be ridiculed as hopelessly nostalgic or idealistic—not smart enough for the modern age.
Let a non-business person challenge some economic “principle,” and she will likely be told by the economists and business folk, “Your problem is you just don’t understand economics.” In other words, you’re not smart enough.
Well, who does understand economics? All those high-paid analysts duped by Enron and flummoxed by the housing bubble? Allen Greenspan? He didn’t see this recession/depression coming, and when it came, he expressed shock at the cupidity of the bankers and corporate leaders. Mr. Greenspan, last year’s unanimous choice for smartest guy in town, apparently was surprised by human greed. Not so smart.
I’m not the smartest guy in town by a long shot, but I know some basic truths. I know that the market is not magic, but a flawed mechanism, like everything else, and to put one’s trust in it is a form of idol worship as silly as bowing before the image of a golden calf. I know that humans, who are also fallen and prone to all sorts of sinful behavior—greed and pride and sloth and idol worship, need laws and regulations to control their tendency toward evil.
To conclude simply: We can’t rely on the smart business guys; we need to respect and hear the wisdom of the broadly educated others, the teachers and preachers and social workers and homemakers and laborers and artists.
Of course, this tendency to venerate successful business people has been a major characteristic of the larger culture for a much longer time--which leads me into my topic for today, the film documentary, Enron: The Smartest Guys in the Room. I had seen the film a couple of years ago, but seeing it now, in the context of the international economic meltdown, it spoke to me even more powerfully, and it prompted some observations about whose influence should dominate in our culture.
The Smartest Guys in the Room traces step by step the rise and fall of the Enron Corporation, showing with absolute clarity the intention of Ken Lay, president of Enron, and Jeffery Skillings, CEO, to do almost anything, no matter the morality of it, to make money for themselves. And for quite a few years, they succeeded.
They succeeded by the skillful use of political influence, by bribing their accounting firm, by reporting profits they did not make but only hoped to make, and by taking advantage of loopholes in energy deregulation legislation.
But for me, the most astounding trick they played involved the stock analysts of the major banks and investment corporations in this country. By playing upon their susceptibility and greed, Enron leaders persuaded these analysts to buy stock from Enron and the bogus companies it had created even though there was no evidence of real profits. One critic, citing Lenin, calls these analysts Enron’s “useful idiots.”
This aspect of the Enron story, one small part of a vast and complex web of shenanigans, is what I want to look at a bit more closely. Stock analysts from virtually every major bank and investment firm fell under the spell of Enron’s courtship. Here’s a list of just a few: Soloman Smith Barney, JP Morgan/ Chase, Citibank, Deutchebank, Morgan Stanley, Citigroup, CSFB, and Merrill Lynch. The analysts dealing with Enron must have been senior members of their firms, and they had to have gotten permission from their superiors to buy the Enron stock under highly suspicious circumstances. In other words, a whole bunch of really smart businessmen bought into the Enron charade. Unfortunately, they weren’t as smart as the smartest guys in the room, the leaders of Enron who conned them.
These leaders, Kenneth Lay, Jeffery Skillings, and the others, were smart guys. They pulled off their smoke and mirrors game for 16 years. They had their employees and most of Wall Street eating out of their hands. In the end, of course, they weren’t smart enough. Skillings sits in jail; Lay died before he got to prison; another committed suicide. And none of them was smart enough, apparently, to realize that a vast complicated house of cards like the Enron house, could not withstand the winds of time and circumstance for very long before it would collapse.
What does the Enron story have to say to us today? Perhaps this: The smart business people from Merrill Lynch and Citibank and Morgan Stanley and all the rest of those banks learned from their mistakes. And so, after 2001 they behaved more sanely, invested more wisely, were less greedy and insisted on more regulation to avoid the losses like those sustained with Enron.
Wrong!! They learned nothing and nothing really changed. The smart business guys, the brokers and analysts went right on making the same stupid kinds of investments they had made with Enron. But on a much grander scale. The housing bubble makes Enron look like a fleabite. Bernie Madoff’s ponzi scheme makes Jeffery Skillings look like a piker.
Much more recently, when President Obama and the press criticized Wall Street executives for giving themselves $50 billion in bonuses in 2008, several of these executives justified the bonuses, saying they have to pay them to keep their smartest people from taking other jobs. Jon Stewart gave the only sensible response one could give to this line of reasoning: “You don’t have any smart people.”
Where did we ever get the idea that the guys running our businesses and corporations are the smartest guys in town? And why, in the last twenty years, has a business model taken over many of our churches and schools and charitable institutions? Because of the belief that business people know how to do things right.
Let some philosophy or education professor question the transformation of professors into workers, of students into consumers, of education into a commodity, in short, of a college into a business, and he is likely to be ridiculed as hopelessly nostalgic or idealistic—not smart enough for the modern age.
Let a non-business person challenge some economic “principle,” and she will likely be told by the economists and business folk, “Your problem is you just don’t understand economics.” In other words, you’re not smart enough.
Well, who does understand economics? All those high-paid analysts duped by Enron and flummoxed by the housing bubble? Allen Greenspan? He didn’t see this recession/depression coming, and when it came, he expressed shock at the cupidity of the bankers and corporate leaders. Mr. Greenspan, last year’s unanimous choice for smartest guy in town, apparently was surprised by human greed. Not so smart.
I’m not the smartest guy in town by a long shot, but I know some basic truths. I know that the market is not magic, but a flawed mechanism, like everything else, and to put one’s trust in it is a form of idol worship as silly as bowing before the image of a golden calf. I know that humans, who are also fallen and prone to all sorts of sinful behavior—greed and pride and sloth and idol worship, need laws and regulations to control their tendency toward evil.
To conclude simply: We can’t rely on the smart business guys; we need to respect and hear the wisdom of the broadly educated others, the teachers and preachers and social workers and homemakers and laborers and artists.
Dave, this hits right into the heart of a growing tension of many involved in Christian schools. More and more CEO models of Christian schooling are popping up and the smartest people in town are running the schools as a business. They don't understand mission, vision, teachers or students, but they are a heck of a lot smarter than I ever will be.
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