The More Things Change

Three decades ago, Penn Central, one of the largest railroads in America, was on the verge of bankruptcy. I remember the enormous pressure on the administration that I served to step in and bail out the railroad. The railroad even hired president Nixon's old law firm to help their cause. It didn't work. The president wisely said, "No," and Penn Central was allowed to go down. The country survived.   In the past few days we've seen history being replayed. Just before its failure prompted the largest bankruptcy in American history, Enron executives frantically looked for help from members of the current administration. Thankfully, it appears the Bush administration worked from the same playbook we did. No bailout has come. The country will survive.   What is being called the Enron scandal involves corporate practices that range from "aggressive" and "questionable" all the way to "arguably criminal." There are accusations that, in the one-year period that saw the company's stock go from ninety dollars a share to less than one dollar, Enron's executives grossly understated the extent of the company's losses.   This story gets worse. Enron's accountants, the prestigious firm of Arthur Andersen, apparently not only signed off on the financial statements, but subsequently told Enron to destroy records on which the statements were based.   What's more, in the months preceding the revelations, Enron executives sold 160 million dollars in Enron stock. While they were selling their own shares, they were reassuring both employees and shareholders of the company's bright prospects. Thousands of employees lost their life savings and retirement accounts, while the executives got millions. If the charges are true, it is disgraceful. It is reprehensible.   As I see it, there are two lessons we must learn from the Enron affair. First, human nature doesn't change, despite secularists telling us that we're good people and, with education, we'll erase sin. Nonsense -- we're sinners. Scandals like this have been a recurring theme throughout American history. The desire for wealth can always drive some men and women to cut corners and take advantage of others, which is why the Bible says what it does about the love of money.   The other lesson involves the distinction between right and wrong in an age that has ceased believing in moral absolutes. If you go to the nation's top business schools, you'll note very little is said about morality or honor. I discovered this when, a decade ago, I lectured on ethics at the Harvard Business School. The school, at the time, offered a course on ethics that I found to be pure pragmatism: Don't do the wrong thing because it's bad for business. I found the students hadn't a clue about real ethics.   You see, ethics, classically, are unchanging standards which derive their authority from a transcendent Authority. Well, the problem is if you teach permissive ethics, you'll turn out the best and brightest into permissive businessmen who cut corners and think they can get away with it. I hope the Enron executives are punished if, as it appears, they have broken the law. This is crony capitalism of the kind that you find normally only in third world countries.   But we'd better learn a lesson as well. When you fail to teach right and wrong, don't be surprised when people do wrong.       For further reading: Charles Colson and Nancy Pearcey, How Now Shall We Live? (Tyndale House, 1999).

01/17/02