The Breakfast Table

Cleaning Up the Information-Age Economy

Like so many things, Enron takes me back to Teddy Roosevelt. During TR’s administration, the American economy was moving from a small-scale agricultural and manufacturing economy to a large-scale industrial economy. Roosevelt supported the changes because they meant that America would possess the economic might to become the world’s premier nation. But he recognized that the new structures created new opportunities for sin. The lords of Wall Street and the monopolists threatened to create a system of crony capitalism that would crush fair competition.

Enron represents the same sort of corruption, updated. We are entering an information-age economy, with mass stock ownership, 401k plans, privatized energy markets, and so on. Americans are happy to move into this new world of increased choice and opportunity. But the new structures make new forms of crony capitalism possible. That’s what Enron tried to create—through political contacts, through bogus partnerships, through pettifoggery that would confuse all but the insiders. So now the government has a legitimate interest in crushing these new cozy relationships in the name of fair competition. Basically this means making sure that small capitalists (stockholders) have honest information so they can compete with the big boys.

The Enron executives, who professed a love of free market capitalism, kept their love pure by never applying it. They are the enemies of the free market. If, as you say, the Republicans decide that their real allies in this are the plutocrats, then they are going to destroy themselves. But if they decide their real duty is to protect free competition, then they have a big progressive-conservative agenda ahead of them, which will be widely popular and could recast domestic politics.

I don’t expect the folks at the New York Times to see this. They are treating this as scandal the way Clifford Odetts might have, or perhaps Hillary Clinton might have during her days on the Watergate committee. One of the many outrageous stories they’ve run is a front-page Sunday piece by Rick Berke and Janet Eldar, “Poll Finds Enron’s Taint Clings More to GOP than Democrats.” I see Mickey Kaus and Andrew Sullivan have leveled their mighty guns on this article, showing how the evidence contradicts the reporter’s spin. But let me just add that the crucial bit of poll data to come out this week was from a Tarrance Group poll showing that, for the first time in memory, more Americans now identify themselves as Republicans than Democrats (by 40 to 35). This is a slow moving number, suggesting something more fundamental than an Afghanistan halo effect. It suggests that Enron isn’t hurting Bush or the Republicans and that Bush may turn out to be a transformational president after all, who can induce independents to swing over and join his party.

If the Republicans can clean up the information-age economy so that people have faith in it, then privatizing Social Security will be easy.