Will Ulrich - Enron: Opening the door to stop white collar crime

Over two millennia ago, Lao Tzu offered what still stands up as one of the most bone-headed comments ever made.

As the ant-lover phrased it, "The more law and order are made prominent, the more thieves and robbers there will be."

In the midst of the fury unleashed by the bankruptcy of former corporate wunderkind Enron, one has a real tough time thinking -- as the aforementioned Chinese wiseman did -- that folks left to their own devices will act like angels.

What's necessary now is a thorough investigation of the Enron debacle. Sure we all know that a majority of Congress benefited from campaign funding from one of the three main players in this collapse -- cashing checks from either Enron, its auditor Arthur Anderson or its largest creditor, Citigroup.

That said, the hot glare of attention on Washington right now will, I think, ensure that a real investigation occurs. Elected officials know that going soft on Enron will translate into straight-up awful political capital. But because such sleuthing has not yet taken place, I withhold final judgment on C.E.O. Kenneth Lay and his cronies. They're innocent until proven otherwise.

Still, if the smoke clears from this case in the near future and it becomes apparent that the people at the helm of Enron are guilty of the sort of massive fraud and insider trading that possibly appears to have occurred, these folks should be put behind bars for as long as the law allows.

Whether committed with a fountain pen or a pen-knife, crimes as destructive as those that may have occurred down in Houston deserve the sort of punishment that makes executives eager to think outside the legal box wet their Italian slacks.

The argument to be made is simple: two premises and one conclusion.

Premise one. Enron is not an anomaly. The sort of business it did was indicative of some of the major developments in the American economy over the last decade. It was motivated by the same forces that motivate countless others. The intelligent folks at Enron must have thought they were acting rationally.

A product of the so-called new economy, Enron recruited talented people that sought innovative business strategies. Trading energy doesn't seem like an obvious idea, but it certainly excited Wall Street.

With executives at the wheel that hoarded stock options and yearned for bonuses, Enron got caught in what seems to me like a natural quest: it did everything it could to create good earnings news and to continually raise the bar that the Street set for its stock.

The best way I can think of it, Enron acted like an eight year old who has to clean her room. Knowing that real cleaning was too daunting a task, Enron pushed all its objectionable losses under a bed of nearly 1,000 nebulous partnerships, affiliates and other entities.

To paraphrase Chris Rock, I'm not saying they should have done it, but I understand.

Premise two. If serious wrongdoing is discovered, the Enron debacle represents a social phenomenon that a government should aim to eradicate. Like a gambling ring, or a mail-order scam that tricks retirees into divulging their credit card information, the "Enron moment" -- as E.J. Dionne described it -- is something our government should do everything it can to avoid.

If hard-working Americans have suffered due to the criminal activity of others, those offenders deserve comeuppance.

I contend that a clear conclusion follows from these premises. If we agree 1) that Enron's executives had incentives to act as they did and 2) that their sins, if proven, are socially unbearable, it follows that the US government should do its best to discourage such activities in the future. We should endeavor to dissuade future Enrons.

How is this done?

More regulation? Perhaps, although I don't necessarily think that cluttering up the law books is the best first step. American capital markets are known as free and efficient throughout the world, and corporations benefit from this fact.

For my money, the best step to take is to strictly enforce existing laws and, yes, punish severely.

White-collar criminals, unlike most of your average law-breakers, enter the game in full pads. With defense lawyers and political connections on their side, they're a lot less afraid of getting hit.

What better lesson can the government teach than placing the most serious offenders behind bars?

Nothing motivates you quite as much to do the right thing as the prospect of being thrown into the general prison population for 10 years, armed only with a government-issue jump suit.

Will Ulrich is a senior Philosophy major from the Brox, N.Y.

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