Ethical Issues in Business and Society: Enron:

Ethical Issues in Business and Society: Enron: The Smartest Guys in the Room

Enron manipulated the energy market in a manner that hurt consumers and did not reflect the state of real economic demand and supply. This was not capitalism, rather it was criminal behavior. It also used underhanded accounting measures that did not reflect its real losses to delude investors, including employees that had sunk their savings into the company.

The capitalist system demands evidence of short-term profitability for a company to survive. There is little respect for a company that grows slowly, particularly in these volatile economic times. Enron's ability to make it seem as if it was wildly profitable on paper was rewarded.

Q3. Socrates would have said that the ultimate goal of life was excellence, and that true Platonic perfection is not realized by the pursuit of sensual, short-term pleasure. The truth, rather than the mirage must be the focus of the company. Likewise, Aristotle would have said that virtue is the objective of all things, not sensual pleasure and immediate gratification. Yet even from an egotistical, rational selfish perspective, the activities of Enron should have been obviously 'wrong,' given the inevitability that they would be eventually revealed.

Q4. Andy Fastow was the 'brains' behind the operation, and played a critical figure in making Enron's actions look legitimate. He also was able, for a time, to ensure that these unethical practices did not actually violate the letter of the law.

Q5. The immediate cause of the downfall lay in the hands of the company's leaders who engaged in concealment of the firm's real profits. However, a failure to adequately regulate corporate enterprise was also to blame, on the part of the government, as well as investment advisers who did not advise clients to manage their risk, or to be cautious of suspicious profits. When people invested in the company, despite suspiciously positive figures, this rewarded the company to risk even more flagrant abuses.

Q6. Enron's slogan "Ask Why" is profoundly ironic, given that no one ever 'asked why' the company was making such astronomical sums. Socrates would have asked 'why' the pursuit of profit was so enticing. Truly great, profitable companies have a goal beyond making money like Apple and Google. At these companies, there is also a love of creation, ideas, and a value placed upon the truly 'smart' people of the room (rather than on those who can make the most money, the quickest).

Q7. We live in a culture of greed. Our society is highly materialistic and we judge people based upon what they can buy rather than who they are, morally. Every time we judge a person based on his or her economic status, we perpetuate this culture of greed.

Q8. 'Mark to market' accounting is both absurd and unethical. Given the unpredictability of the economy, there is no way one can say with certainty that profits as-yet-to-be-realized are the same thing as real profits. An unseasonable winter or summer can wipe out expected energy profits as can an unexpected political event.