This column appeared in The National Post in January 2002:
Ten days ago, The New York Times' headline writer summed up the "rapidly exploding" Enron scandal with lofty patrician ennui: "A Familiar Capital Script" – ie, this was a story about the "uncomfortably close" links between corporate fat cats and a Republican Administration.
But, like some drunken repertory actor, "Enrongate" keeps wandering off the familiar script. I pointed out a week ago that the Times' hopes of converting a business scandal into a political one and sticking it to the White House were doomed, if only because this is one occasion when the Clintonian refrain of "Everybody does it" happens to be true: in the 2000 political season, Enron divided its "soft money" contributions almost equally between Republicans and Democrats.
And now in the most hilarious twist the sozzled rep actor has junked the script entirely and bit The New York Times in the ass. Last week, a gazillion paragraphs deep into a butt-numbing round-up of developments in the "rapidly exploding" scandal, the Times confirmed that in 1999 its star economics columnist Paul Krugman had received US$50,000 (that's eightysomething Canadian, probably more if you're reading this after the markets open) for serving on Enron's advisory board. What did this board do? "This was an advisory panel that had no function that I was aware of," said the columnist. "My later interpretation is that it was all part of the way they built an image. All in all, I was just another brick in the wall." When in trouble, reach for the Pink Floyd songbook.
Mr Krugman, an economics prof at the Massachusetts Institute of Technology, has been one of the media's most ferocious Bush bashers and, since Enron went belly up, a tireless peddler of Bush-Enron linkage. Indeed, he has written about little else in recent weeks, always interpreting the scandal in line with his long-held beliefs about greedy plutocrats, slavering Republicans on the teats of their big donors, and helpless little guys getting stiffed by both. Why, there he was only last Tuesday in a column on "Crony Capitalism, USA", demanding to know "Why did the Administration dissemble so long about its contacts with Enron?"
Short answer: they didn't, you did. Professor Krugman has been unrelenting on Enron execs enriching themselves at the expense of the downtrodden workers, without mentioning that he was among those blessed by executive largesse: "Enron's leaders have walked away from the debacle chastened but very, very rich," he wrote on December 4th. Even after the obscure, bottom-of-the-story revelation of his own windfall, the Professor wouldn't let up, raging on Friday about "the utter unfairness of it all - employees lose their life savings while crooked executives walk away rich." And you walked away with 50,000 bucks. But that's okay, because it was for doing nothing.
$50,000 is a high price to pay even for prestigious nothing. It's not walking away rich, but it's walking away with more than most Enron employees have to show for their years of labour. It's ten thousand more than the median household income of the United States, never mind all those little folks the Prof feels so badly for. The man who sneers at the malign influence of Enron money on Republican politicians – or, as he calls them "the people Enron put in the White House" – has received more money from Enron than any member of the House of Representatives. If he were in the Senate, where 71 of 100 members have been endowed with Enron moolah, he would rank in that crowded field as the third biggest beneficiary of the company's generosity. And, whereas the pols' Enron take was stretched out over several election cycles, Professor Krugman got his nice, clean 50,000 in one year. Yet, while he takes it as read that Enron's cheques to Dub and Dick and Senator Sleazebag and Congressman Forsale were in return for something, in his case, he assures us, it was a big fat cheque for …nothing. So that's okay.
I do believe Professor Krugman is getting his Pink Floyd hits muddled up. It's not "Another Brick In The Wall" he should be singing, but "Money", which seems neatly to sum up his world view:
"Money, it's a crime
Share it fairly
But don't take a slice of my pie."
Now it's true there are enterprises where one can find oneself in a position to acquire 50,000 bucks for doing zip – movies, Broadway, rock'n'roll and other activities that defy the constraints of more earthbound economic activities. But Professor Krugman is not Mariah Carey. As Virginia Postrel (on her dynamist.com website) points out, "No well-managed company would dole out that kind of cash just to get access to Paul Krugman's name. The payment wasn't a consulting fee, and by Krugman's account Enron did not require any of his time in exchange. Forget Krugman's potential conflicts, the huge payment should have set off alarms about Enron management's lackadaisical attitudes toward its fiduciary responsibilities." In other words, if the producer's girlfriend gets $50,000 for being "script consultant" on a movie (as happened to a friend of mine), she can be forgiven for not knowing about how any of this icky money business works. But, if an economist gets offered 50,000 for nothing, he should at least understand it doesn't come out of thin air – down the line, it might even come out of the pockets of all those little people he bleats on about.
As for whether or not he did "nothing", well now that's interesting. The problem with Enrongate as a political scandal is that there's no evidence of Republicans or Democrats doing anything they wouldn't have done anyway. There is complete ideological consistency on the part of both parties, despite Enron's cheques.
But Krugman? His current take on the reasons for Enron's flopperoo was explained in the Times on December 14th: "From 1997 to 2000, the years when Enron stock rose from $20 to $90, business gurus disdained old-fashioned companies whose valuation had something to do with hard assets… such new-age business heroes as "petropreneurs," who owned neither oil wells nor refineries… Enron was absolutely fabless - it prided itself on being an "asset light" company. OK, it owned some pipelines, but what it really offered was the vision thing: it would create markets in everything, and make money by trading in those markets…"
My word, don't those chaps sound silly now! Krugman gleefully mocked Business Week for hailing Enron as "more akin to Goldman Sachs than to Consolidated Edison" – the quintessential old-economy electric company. But, in fact, it was Krugman himself who'd made this preposterous comparison, in an article for Fortune in May 1999 written while on the Enroll payroll and stopping just short of the full Monica:
"Enron does own gas fields, pipelines, and utilities. But it is not, and does not try to be, vertically integrated: It buys and sells gas both at the wellhead and the destination, leases pipeline (and electrical-transmission) capacity both to and from other companies, buys and sells electricity, and in general acts more like a broker and market maker than a traditional corporation. It's sort of like the difference between your father's bank, which took money from its regular depositors and lent it out to its regular customers, and Goldman Sachs … The biggest force has been a change in ideology, the shift to pro-market policies.. a combination of deregulation that lets new competitors enter and "common carrier" regulation that prevents middlemen from playing favorites, making freewheeling markets possible."
Which is nothing like anything he's said in the last two months.
I'm grateful to Andrew Sullivan, eponymous host of andrewsullivan.com, for unearthing this gem. He and Virginia Postrel have been tremendously tough on Krugman's arrogant dissembling. But they're both principally Internet commentators. What of the massed ranks of print pundits so certain of the corrupting influence of Enron cash on Dick Cheney? As of late yesterday, I could find only two newspapers on this continent that had so much as mentioned Krugman's connection: there was a small reference in Saturday's Los Angeles Times and Peter Foster's column in this newspaper. Perhaps America's leading media critic, The Washington Post's Howard Kurtz, usually so eager to pounce on a story, will find it in himself finally to get around to mentioning it this morning. But, if he doesn't, the objective observer might conclude from the silence that media cronyism is at least as big a problem as the political variety.
Meanwhile, in response to media pressure, politicians from Kaye Bailey Hutchison to Hillary Clinton are scrambling to give away their Enron money to charity. Will Krugman join them? Or will he stick to Pink Floyd?
"Money, get back
I'm all right Jack
Keep your hands off of my stack
Money, it's a hit
Don't give me that
Do goody good bullshit."
Perhaps at the very least the laughably hypocritical Professor could stop lecturing us lessers on the evils of greedy capitalism. Hey, teacher. Leave us kids alone.