Enron Was Not Part of the Free Market

I read some interesting statements about Enron today. Perhaps you will enjoy them, too.

Reviewing the book "The Big Ripoff: How Big Business and Big Government Steal Your Money" by Timothy P. Carney, Thomas E. Woods, Jr. wrote in "Ripping Off the Taxpayers":

Carney’s coverage of the Enron scandal is the proverbial chapter that’s worth the price of the book. Opponents of the market economy had a field day when Enron’s financial shenanigans came to light. A liberal San Francisco Chronicle columnist, claiming that “the Enron scandal makes it clear that the unfettered free market does not work,” summed up what so many were saying in 2001 and 2002. He added that “Enron makes that whole Ayn Rand ‘Fountainhead’ thing look a little silly, too. Who is John Galt? Ken Lay.” (John Galt appears in Atlas Shrugged, not The Fountainhead, but never mind.)

The Cato Institute’s Jerry Taylor was closer to the truth when he described Enron on balance as “an enemy, not an ally of free markets. Enron was more interested in rigging the marketplace with rules and regulations to advantage itself at the expense of competitors and consumers than in making money the old-fashioned way — by earning it honestly from their customers through voluntary trade.” Building on this observation, Carney shows that Enron, far from being a creature of the free market, was a strong supporter of a variety of government regulations, and reached the heights it did largely thanks to government favors. Even some of its strange accounting practices had been approved by the Securities and Exchange Commission (thereby giving the public a false sense of security regarding Enron’s actual health).

Thus, Ken Lay, the wicked capitalist, made high-profile appeals in favor of the Kyoto Protocol on global warming, describing it as “a tremendous opportunity to stimulate realistic climate solutions.” He wrote in an e-mailed message that Kyoto would “do more to promote Enron’s business than almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States.” Since Enron was primarily an energy broker, it could easily become the major trader of CO2 credits that Congress would very likely have created in order to help American industry come into compliance. On top of that, since Enron owned natural gas pipelines and dealt mainly in natural gas — far cleaner than coal or oil in terms of CO2 emissions — the Kyoto restrictions would give it a competitive edge.

Enron, Carney shows, was on the receiving end of countless waves of government subsidies. It also manipulated the bizarre regulatory thicket that was the California energy market in grotesquely anti-social ways that enriched Enron at the expense, quite literally, of everyone else. The whole story has to be read to be believed. But it’s one that could not have occurred in a free market. {1}

Wow!

{1} Source: http://www.fff.org/freedom/fd0702h.asp