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Category — Edison to Enron (Bradley)

Edison to Enron (Bradley): Some Thoughts

Consider the preconceptions that surface in your mind when you read the name “Enron”. Chances are that they are negative, and not particularly nuanced — fraudulent business activity, tarnishing the idea of free markets by trying to manipulate them using the political process, and so on.

If that’s true for you, then you are probably in a pretty similar mental space to mine when I started reading Rob Bradley’s Edison to Enron: Energy Markets and Political Strategies. Rob’s detailed and thoroughly researched book is a well-told analysis of the valuable and interesting regulatory and business history that formed the backdrop of Enron’s spectacular failure.

Samuel Insull, Father of Modern Electricity

The name of the book is somewhat misleading, because the first third of the book focuses not on Thomas Edison but on Samuel Insull. Insull, the oldest son of a working class family in Victorian England, emigrated to the U.S. (at age 21) after several years of a successful financial career in London.

Insull brought, and sharpened, his business acumen to complement Edison’s inventive creativity. Together they built the company that was renamed General Electric in 1892. But it was Insull’s business genius after he left the manufacturing side of the business to enter the distribution side (integrated from power generation to delivery), which accelerated the electrification of the country.

Rob tells Insull’s story extremely well, and provides extensive links to supporting material that illustrates how important Insull’s contributions were to Edison’s success individually and as a business/set of businesses.

With his analysis Rob also argues that Insull’s business skill generated substantial social value (i.e., consumer surplus as well as profit). That point is incontrovertible, but the story is not told often enough or well enough, and Rob has done so here.

I appreciated this part of the book in particular because although I am familiar with Insull’s biography, I did not realized that his business model advocacy had shaped our modern electricity industry so dramatically; for example, Insull consistently pursued acquisitions and consolidation that led to reduced costs through economies of scale, but always advocated for pairing those moves with reductions in retail prices to consumers. The companies he headed that followed this strategy profited while charging lower prices, in the absence of formal economic regulation.

Insull was, though, always an advocate for regulation, largely because he worried that rising debt service costs would make it difficult to pursue this model. [Read more →]

July 25, 2012   2 Comments

Bradley’s Political Capitalism Project (Part I: Introduction)

Edison to Enron … [is] the second part of a three-volume series on the history of American energy, told through the distinction between productive and predatory capitalism.  Bradley is a very much underrated economic historian, largely because of his ‘amateur’ [nonacadmic] status, but there is a remarkable amount of learning in his books.”

- Tyler Cowen, ‘What I’ve Been Reading,’ Marginal Revolution, November 15, 2011.

Last Friday afternoon in our nation’s capital, Robert L. Bradley, Jr., a prominent figure in the esoterica of energy markets, unveiled the Project on which he has labored for a decade before a full room at the American Enterprise Institute. Kenneth Green moderated, and comments were provided by Stephen Hayward and yours truly. My formal remarks follow.

The Project

Enter stage right, our protagonist with The Bradley Project. He has three arrows in his quiver, a trilogy of books that will be the authoritative commentary on American political capitalism and energy policy inspired by the rise and fall of Enron (where Bradley worked for 16 years).

He artfully aims his first arrow, (Capitalism at Work: Business, Government, and Energy) a political economy text that forges a path for his second onslaught (Edison to Enron: Energy Markets and Political Strategies), a history text that applies the economic principles of Book 1 to the natural gas and electric industries from their 19thcentury inception to about 1985.

Both books are dense and lengthy–but very readable. Bradley tackles the vast literature behind subjects and provides hundreds of pages of documentation. For the most serious scholars (are there many anymore?), he provides Internet appendices per chapter, no less than 52 for Book 1 and 74 for Book 2. The extra mile seems to have been run in virtually all instances.

His actions set the economic, political, and historical stage for his yet unleashed third arrow, a text that will mine the Enron debacle and its aftermath for trenchant insights that will help both academics and energy professionals better understand what happened but more importantly, develop insight for the future regarding the nexus of politics and the market economy.

· Act I (today): the Bradley Project is brilliantly conceived, brilliantly executed, and will stand the test of time.

· Act II (tomorrow): his perspective pierces the veil that hides the excrescence that passes as the current sorry state of energy policy.

· Act III (Saturday): dare we venture that there is such a thing as sound government intervention, heretical as that may be in this crowd.

· Act IV (Sunday): the future or, who is John Galt? [Read more →]

February 2, 2012   1 Comment

“Edison to Enron: Energy Markets and Political Strategies” (Book 2 of trilogy on political capitalism published)

“This scholarly work fills in much missing history about two of America’s most important industries, electricity and natural gas.”

   – Joseph A. Pratt, NEH-Cullen Professor of History and Business, University of Houston

“An engaging look back at the market and political development of the U.S. energy industry. Industry and policymakers will benefit from reading this book.”

   – Dr. Robert Peltier, PE, Editor-in-Chief, POWER magazine

Edison to Enron is the second book in my trilogy on political capitalism inspired by the rise and fall of Enron (order information: Amazon, Scrivener Publishing, John Wiley & Sons).

Book 1, Capitalism at Work: Business, Government, and Energy, provided a worldview of market-based versus political business, as well as an interpretation of energy sustainability. The present volume (Book 2) examines the individuals and companies that are related to Enron’s prehistory.

Book 3, Enron and Ken Lay: An American Tragedy, will chronologically describe the rise and fall of Enron and the post-Enron world.

The trilogy and other writings on the intersection of business and government are featured at my website, Political Capitalism.

A video on Book 2 in the context of my book output is here.

Dust Jacket Description

Energy is the resource of resources—the master resource. The fossil fuels in particular—and the electricity generated from them—have made human life longer and better. For many, they have made life possible. Without energy, there would not be the modern world of production and consumption.

During the last 150 years, the United States has been at the forefront of energy development. Edison to Enron chronicles important swaths of that history, focusing on the great entrepreneurs in electricity and in natural gas, who turned potential into plenty and privation into prosperity.

Author Robert L. Bradley Jr. traces individuals and companies that made America an energy nation, from Thomas Edison and Samuel Insull in electricity, to John Henry Kirby in oil, to Clint Murchison, Ray Fish, Robert Herring, and Jack Bowen in natural gas. Companies such as General Electric, Houston Oil, Southern Union, Fish Engineering, Houston Natural Gas, TransCanada, Florida Gas, and Transco Energy are integral to Bradley’s energy history, which links the country’s nineteenth-century past to its twenty-first-century present. [Read more →]

September 30, 2011   1 Comment