Being the smartest guy in the room isn't always a compliment

I finally watched “The Smartest Guys In the Room”, the documentary about the Enron scandal. It was pretty interesting, it didn’t give you much information that wasn’t in the news, but it did give good character portrayals of the major players. What was surprising to me during the scandal, and that I was reminded of while watching the documentary was the complicity of everyone involved. Enron’s officers, the lawyers, the accounting firm (Anderson), and the major-name investment banks all failed to uphold their responsibilities to shareholders and employees (although I bet few people in this group actually thought they had a duty to the employees). No one was asking questions, no one was standing up and saying this was wrong. On a side note, I bet that Accenture Consulting is so happy that they lost that lawsuit to keep the Anderson name, it was a blessing in disguise.

Anyway, the movie brings up that famous experiment by Stanley Milgram where subjects would administer what they thought were lethal levels of electricity to other subjects if they were directed to do so by someone in a position of authority (a Dr, in a lab coat) etc… It is the best explanation of how this type of thing could happen. I’m sure that the lawyers, accountants, and bankers all had questions, but the people at the upper levels were all getting paid and telling them that it was okay; so they went ahead and performed while these obvious questions of where the money was going went unanswered. Authority is a powerful force in behavior, we shouldn’t ever forget this.

Another shocker to me was how involved the traders were in the California blackouts. I had read reports of Enron traders manipulating the energy prices and the supply of energy to jack up the prices, but to hear the recordings of the traders talking about raping the California market and taking advantage of deregulation to steal from grandmothers was appalling. Then again, most of these traders were all under 30, they were hired straight out of the best schools and given million dollar bonuses. At the age of 24-28, these kids were making millions and would therefore do anything Enron asked them to do, they didn't think about the end consumer. I’m not surprised, although I consider myself pretty ethical, I realize that my ethical compass is getting more precise with age and that I’m more ethical now approaching 30 than I was at 24. It’s easy to see how the company took advantage of these greedy, little shits to do their bidding.

In the end, this is such a tragic story for those people who worked for Enron and PSE. People who put in hard, traditional work lost everything – a linemen for PSE said at one point his 401K was at 375K and dropped to around $1,400 – while the executives and traders who did nothing except talk for a living made off w/ millions – sad.