My recent editorial in Investor’s Business Daily, “What Happened to Business Prudence?”, offers examples of politically correct and politically derived business practices in order to show how such “profit” opportunities can be bad for both shareholders and the broader economy.
Mortgage-lending regulation is certainly the (sub)prime example in regard to the present financial crisis–coupled with the Fed’s easy-money policy, which sparked an artificial boom. But my essay also brings attention to the most politically motivated company in the history of the energy industry–Enron. In its prime, this company was considered “innovative” and “progressive” on energy and environmental issues such as renewables and climate-change.
But Ken Lay’s company never turned a profit with its half-owned Solarex Corp. and with Enron Wind Corp. CO2 trading never got off the ground. Enron Energy Services, an company to which firms could supposedly outsource their energy-management, lived off accounting tricks and was dismantled soon after the parent’s bankruptcy. The Left environmentalists’ favorite company imploded, but not before the company’s lobby machine had done its part to saddle Texas consumers with a renewable-energy quota. This law now accrues to the benefit of the purchaser of Enron Wind, General Electric.
My essay, which introduces some themes from my new book, Capitalism at Work, concludes as follows:
A new legal relationship between government and the economy is required — free-market capitalism in place of political capitalism. With this, should come a new understanding of the proper philosophy of entrepreneurial capitalism — tough-love prudence in place of the amorphous doctrine of “corporate social responsibility.”