Corporate Dreams: Big Business in American Democracy from the Great Depression to the Great Recession

Chapter 27 - George W. Bush, Enron, and the Great Recession

Chapter 27 George W. Bush, Enron, and the Great Recession In the presidential election of 2000, Democratic candidate Al Gore won the popular vote. But Republican George W. Bush triumphed in the electoral college, thanks in part to a badly designed ballot that confused some voters in a key Florida county. It was a fluke, but Americans had elected their first president with a master’s degree in business administration. Bush had received his MBA from the Harvard Business School in 1975. Educated in 1970s corporate culture, he became a national exemplar of the moral conceit implicit in the notion of values-based leadership. Not because he had a weak character but because he had a strong or at least a stubborn one, the bad ideas Bush had absorbed about leadership in the corporate world undid him in the White House. Acculturated to manage by values, Bush saw the vile atrocities of September 11, 2001, as requiring a response in the form of moral leadership, which, in his practice of it, amounted to moral arrogance. Self-deceptive moral pretense is bad enough in a corporate executive suite, but it brought still more disastrous results in the Oval Office—an unconstitutional and counterproductive war on terror along with an unnecessary and horribly wasteful war in Iraq.1 The Bush presidency made plain the threat that management values posed to democratic values, as well as the danger of allowing corporate culture to become mainstream American culture. Corporate speak had become part of common American parlance during the 1990s. All too many hospital managers, educational administrators , and elected officials thought they showed a new spirit of service, not ignorance and arrogance, when they substituted the generic word customer for the irreplaceable rubrics patient, student, and citizen. School 189 committees, charities, and even churches wrote “mission statements” reflecting less a gnostic spirit than their members’ workaday management techniques. So the membership of the Bush administration marked a logical conclusion to the ubiquitous spread of the corporate mindset. Vice President Richard Cheney had been CEO of Halliburton, a construction and oil services company. Defense Secretary Donald Rumsfeld had run one pharmaceutical company, G. D. Searle; had chaired the board of another, Gilead Sciences; and had also been CEO of General Instrument, a high-tech communication firm. Bush himself had been CEO of a couple of small Texas oil companies and had served on the board of another, Harken Energy.2 Bush prided himself on corporate-style “transformational leadership,” a phrase that suffused his administration. Defense Secretary Rumsfeld, aiming to make the military leaner and meaner, able to fight wars for a dime instead of a dollar, named his Pentagon program “Transformation.” Condoleezza Rice, secretary of state in Bush’s second term, was an academic , not a business executive, but she propounded “transformational diplomacy.” But whereas James MacGregor Burns had seen an intimate relationship between transformational leadership and managerial skill, Bush seemed to follow too many corporate executives by supposing he could practice moral leadership without hands-on management. Nowhere was Bush’s lack of practical management skills more evident than in his response to the Enron scandal of 2001. So shattering was 9/11 that it is easy to forget that in the following twelve months Bush also had to deal with what was, until then, the largest challenge to the moral standing of corporate capitalism since the Great Depression. Scandals at Enron, WorldCom, Global Crossing, Qwest, Tyco, Adelphia, and other companies put in question the financial statements of every publicly held corporation in America. Enron, a high-flying energy company, symbolized late-twentiethcentury confidence that information technology made possible a new surge of entrepreneurship. Originally a pipeline company distributing natural gas, Enron had become a trader of commodities ranging from water to broadband. The notion that entrepreneurial action had to be fast and loose may have played a role in the Enron board’s decision— despite a corporate ethics code forbidding such arrangements—to allow E n t r e p r e n e u r s h i p 190 Chief Financial Officer Andrew Fastow to serve also as an officer of supposedly independent companies or “special purpose entities” (SPEs). As an officer of both the SPEs and of Enron, Fastow was able to loot the Enron treasury. For example, at the end of 1999, Enron sold lowyielding certificates in a trust called Yosemite to a Fastow SPE, enabling Enron...